For the past few years, accessory dwelling units—ADUs, casitas, backyard cottages, granny flats—have become the darling of housing policy. Cities desperate to address affordable and missing middle housing embraced them. Legislators praised them. Developers discovered them. Homeowners dreamed about rental income or a place for aging parents.
And frankly, for a while, it worked.
ADUs felt like a rare win. They allowed gentle density without massive zoning battles. They offered affordability without towering apartment buildings. They gave homeowners options without fundamentally changing neighborhoods. In many ways, they were the Goldilocks solution—just enough housing, just enough flexibility.
But now, as often happens in housing, the pendulum is swinging.
The Original Promise
The early vision for ADUs was simple. One small unit. Modest in size. Designed to blend into neighborhoods. A quiet way to add housing supply without creating fear among existing homeowners.
States like Arizona saw the potential. New laws required cities to allow accessory units on single-family lots to increase supply and flexibility. Supporters argued this would help address severe housing shortages while allowing multi-generational living and small-scale rental opportunities.
The goal wasn’t to turn single-family neighborhoods into dense rental districts. It was to give ordinary homeowners a chance to participate in solving the housing crisis.
But as anyone in the offsite and modular industry knows—and I've written about this countless times—when opportunity meets profit, the rules start getting stretched.
From Backyard Cottage to Backyard Compound
Here’s where things started to change.
Developers and investors quickly realized that ADUs weren’t just a housing solution. They were a business model. In some markets, a single-family home became the anchor for multiple rental units. Larger ADUs. Taller ADUs. Multiple ADUs. Built closer to property lines. Designed less for families and more for yield.
Some laws even pushed in this direction. In Arizona, regulations have required cities and counties to allow at least one attached and one detached ADU, and in some cases additional units on larger lots.
This is where homeowners began to notice.
The quiet promise of a small backyard cottage suddenly looked more like a mini-apartment complex next door.
The Pushback Was Inevitable
The result? Neighborhood backlash.
Homeowners started organizing. HOAs hired lawyers. Local officials who once supported ADUs began hearing from voters. Concerns grew about parking, privacy, infrastructure, and property values. In some cases, neighbors fought oversized or dense backyard projects that felt out of scale with existing homes.
And recently, lawmakers in Arizona blocked a proposal that would have further expanded the ability to build these units—an early signal that the political winds are shifting.
This isn’t surprising. Housing policy rarely fails because of bad ideas. It fails because of human behavior.
The Pattern We Keep Repeating
Here’s the uncomfortable truth.
Every housing innovation starts with good intentions. Then it gets pushed further. Then it gets abused. Then voters shut it down.
We saw this with urban renewal. We saw it with tax incentives. We saw it with short-term rentals. And now we’re watching it happen with ADUs.
The danger isn’t that ADUs are bad. The danger is that we could lose them entirely if policymakers and the industry don’t recognize when enough is enough.
Because voters don’t distinguish between a modest in-law suite and a backyard rental compound. They only see the change they didn’t expect.
A Warning to the Industry
If you’re in offsite construction, modular, or component manufacturing, this matters more than most people realize. ADUs have become one of the strongest growth markets in the last decade. Many factories are building their future around them.
But if overreach continues, the backlash could freeze this market in many cities. The same towns that embraced ADUs could suddenly restrict or eliminate them.
And when that happens, factories and developers will once again ask, “What went wrong?”
The answer will be the same as always.
We pushed too far.
The Smarter Path Forward
The lesson here isn’t to slow innovation. It’s to respect scale and community acceptance. Small wins that last are better than big wins that disappear.
If ADUs remain modest, thoughtful, and community-friendly, they can help solve housing shortages for decades.
If they become speculative tools for squeezing maximum density into every backyard, voters will eventually shut the door.
And when that happens, we won’t just lose ADUs.
We’ll lose trust.
And in housing, trust is harder to build than in any factory.
Comments
Post a Comment