ADUs bring income and options for Mass. homeowners, but resale value isn’t yet clear

Real Estate

A year since the Affordable Home Act allowed accessory dwelling units to be built across the state, some homeowners are wondering if buyers will want their ADUs when they sell.

When Bailey and Matthew Vaselkiv decided they wanted to move into a house with more space for their growing family, their goal was to stay in Beverly. Then a seller’s agent brought an off-market option to their attention: A roomy 1900s farmhouse in their current neighborhood. Aside from needing a few updates, it had one relatively uncommon feature: an accessory dwelling unit (ADU) in the yard. They bought the property in September and decided to rent the ADU to the previous owner’s existing tenant.

“We weren’t hunting for [an ADU], but once we found this house and saw it was there, we felt like it bought us a spectacular amount of optionality,” Matthew said, explaining its rental income helps defray mortgage costs and gives them flexibility to make improvements on the house.

One year ago this month, on Feb. 2, 2025, the ADU provisions in Governor Maura Healey’s Affordable Homes Act took effect. The law gives most Massachusetts homeowners the right to build ADUs up to 900 square feet on their property without special approval from their town’s zoning board. The idea is that these backyard homes can be used to house aging relatives, rented out for additional income, and play a role in easing the state’s housing shortage.

A December Globe report found that construction on ADUs has been sluggish since last year, due to factors like permitting obstacles and upfront costs — units can cost between $150,000 and $300,000 to build, per the ADU insights website AduWizard, while more luxe versions surpass $500,000. With such a large up-front investment, those considering building ADUs are wondering if their money will be recouped and whether eventual buyers will be interested in them.

“Most people only live in their house for an average of seven years,” said Dana Bull, a real estate adviser with Compass in Marblehead. “So what happens when you make this investment in your ADU and then you sell it?”

Because the law was passed so recently, it’s too early for a complete picture on impacts like home values, according to Tara Smith, press secretary for the state’s Executive Office of Housing and Liveable Communities. ADUs simply aren’t widespread enough in Massachusetts to have return-on-investment data.

“We are on this first frontier, in this first wave,” said Tim O’Reilly, director of preconstruction at Backyard ADUs, a company that builds ADUs in Massachusetts and Maine. “People ask, ‘Hey, if I spend $250,000 in my backyard, does that increase the value of my house?’ And the short answer is no, but where is the data on that?”

O’Reilly points to communities on the West Coast, where ADUs sprouted up earlier. Evidence from Portland, Ore., suggests that once it becomes easier for home appraisers to find comparable properties with ADUs that have recently sold in a given area, it’s less likely ADUs will be undervalued in appraisals, according to a recent report from the Pioneer Institute. In general, an ADU can add up to 25 percent onto a home’s value, per a Harvard Joint Center for Housing Studies report, though that percentage is dependent on the ADU’s location, the market, and the quality of the build.

The majority of O’Reilly’s clients are building backyard homes for their relatives to age in place. “When we work with folks, the elephant in the room is, well, ‘What is the plan in 10 or 15 years if mom’s not there?’” he said.

Marsha Gleason worked with Backyard ADUs to add a unit to her yard in Northborough last year. She sold her home to her son and now lives in the ADU on the property. “For our family and for our purposes, it was a perfect scenario,” she said. Gleason explained that when she passes, her son has plenty of options for how to use it, whether that’s letting one of his sons live in it, converting it into a workspace, or renting it out.

Buyers inheriting ADUs may see the rental income as a pro. “We had no desire to be landlords, but we felt like having this [ADU] was a more realistic way to go about it,” Bailey Vaselkiv said of her Beverly home. She said her friends have asked her whether it feels strange to have a tenant living in the backyard. “Honestly, we don’t notice it,” she said. “It’s just only really added good things to our life at this point.”

On the sellers’ side, Bull likens adding an ADU to building an in-law suite or finishing a basement. Whether or not you choose to embark on the home project comes down to whether it makes sense for your life now, rather than for future buyers.

“For the typical homeowner, I think they need to look at it through the lens of: the ROI [return on investment] is not a straight line. There needs to be inherent value for you and your lifestyle. I do think it overall will add value, but the dollars you put in are not necessarily going to equal the dollars you get out in the sale, especially if you’re on a short timeframe,” Bull said. “But over 15 years? Yeah, it’ll probably shake out to be a win.”

Madeline Bilis is a freelance journalist based in Boston, where she covers real estate, travel, and design. She will always defend the city’s brutalist buildings.