Dive Brief:
- Charlotte, N.C., launched a new accessory dwelling unit program offering homeowners up to $80,000 in forgivable, interest-free financing to build an ADU on their property within the city limits.
- The Queen City ADU Program, launched in September, requires that participating homeowners rent the ADUs to tenants not earning more than 80% of area median income ($62,850 for a single-person household) and keep monthly rent below the fair market rent for a studio for renters earning 70% of AMI.
- The units are “a creative way for homeowners to build wealth via rental income while helping others find affordable housing,” the city said in a press release.
Dive Insight:
More cities and states are embracing ADUs as one method to address a far-reaching housing affordability crisis.
Sometimes called granny flats or tiny houses, ADUs are smaller secondary residences on the same property as a primary residence. They can be an affordable and effective housing option for seniors, retirees, single residents and multigenerational families, according to Charlotte.
“These units provide smaller housing options that are currently missing in Charlotte’s housing mix,” the city stated.
Home prices in the Charlotte area have surged 72% since 2017, outpacing the national average of 41%, according to the United Way of Greater Charlotte.Only 8% of rentals in the city are considered affordable, it says.
To be eligible for the loan, the ADUs must be self-contained units (containing their own kitchen and bathroom) and take up no more than 50% of the primary residence, with a cap of 1,000 square feet for detached units. The program permits only one ADU per lot. The loan is forgiven at a rate of $10,000 per year of affordability for up to eight years, with faster forgiveness available (up to $15,000 per year) if units house housing voucher holders or residents referred by supportive service agencies or the city’s housing partners, according to the city.
California in particular has embraced ADUs: Their construction accounts for 20% of all new homes constructed this year, according to California YIMBY CEO Brian Hanlon.
Exactly how effective ADUs are at solving the ongoing housing crisis remains to be seen. Their feasibility as a significant source of affordable housing has been called into question.
