Tiny Spaces, But Lots Of Room For Pace-Type Financing

Move over mortgages – there's a new kind of real estate that could benefit from a new type of funding. As higher interest rates and rising prices are making affordable housing a challenge in many markets, cities can fight the problem with a small-scale solution – accessory dwelling units (ADUs).

What's an ADU?

ADUs are additions (attached or detached) to homes or converted spaces within already existing buildings that can be used as rental units. Local governments on the west coast have become friendlier to the development of ADUs as a new housing option for strapped markets. In San Francisco, underused areas in multi-family dwellings (laundry rooms, basements, storage rooms, utility rooms) are being converted into apartments. In other places, "granny flats" or "in-law apartments" are being added to the backyard of single-family homes. Cities have been making building code and zoning changes to encourage this construction and make these new living spaces safe and