What does a DADU cost/worth?

The first questions we often answer for people are what can I build and how much does it cost? A reciprocal question being asked by homeowners and developers is what is a DADU worth?

This DADU features 2 Bedrooms and 2 1/2 baths and 1,000 sq. ft. plus. This DADU sold for $931,000.

Some recent DADU sales in Seattle

SEATTLE DADUs - TOP TRENDS FOR 2020

2019 brought sweeping new code changes to Seattle's Backyard Cottage/DADUs. Here's what we are expecting to see more of in 2020.

1. Family Sized 

Seattle’s newly adopted land-use code now allows cottages to be taller and larger – up to 1,000 sq. ft. in size. With this extra space many new cottages are being designed and built with 2 or even 3 bedrooms. Up until now, most cottages were designed for aging parents or as rentals to accommodate an individual or couple. These new larger cottages are often being designed for families with children — such as a 900 sq. ft. cottage we are designing in Ballard for a family of five and a 1,000 sq. ft. cottage for a family of four. In both cases the owners will move into the new cottages with their families and rent out the existing primary residence.

2. Extra Units

The new code now allows a DADU and an ADU.  (previously only

one or the other was allowed). Many people who have existing ADUs are exploring the option of adding DADU to their properties.  There are limitations with the new rules to keep in mind. Adding a 2nd ADU to an existing single family residence will likely trigger extensive building code driven upgrades, including adding sprinklers to the entire structure.  If the new second unit is a DADU the DADU will need to meet green building standards or made affordable to and reserved solely for "income-eligible" households for a period of 50 years.

3. Maximizing the value of your property

With housing prices and rents in Seattle still at all-time highs, many people including building developers are seeking to unleash the potential of their back yards.  For example, one developer is planning to add DADUs to their entire portfolio of existing rental properties. This is possible now that owner occupancy is no longer required. 

Builders of new residences are also adding DADUs and AADUs.  We are currently working on one project where the existing residence is being remodeled and an ADU added. The existing lot is then being divided and a new residence, with an AADU and DADU, is being built on the newly created lot.  This development is taking advantage of an over sized lot to create density in a desirable neighborhood while preserving and updating the existing historic home.

4. Going Condo

The use of condominium agreements to sell the primary residence and the DADU separately is probably the biggest trend of 2019 and will only continue.  While creating a DADU adds value to a property as a whole,  an even higher value can be obtained by selling the primary residence and the DADU separately.

5. Building Value

Building a DADU is a significant long term investment. Designing to achieve the maximum potential for the individual lot in light of zoning restrictions and the unique goals of their owners is and will continue to be the best way to achieve the highest value for this investment. Assisting to prioritize goals and achieve potential is in light of code restrictions and construction cost trade-offs is a challenge we enjoy and that we look forward to continuing in 2020. 

what is a DADU worth? more than you might think

Choosing to build a backyard cottage is an important long term decision. A good first question to ask when making that decision is how will I establish a budget for the cottage? While it may be hard to put a value on how a well designed home makes you feel or the value of having a family member living nearby, some qualities are easier to asses. If that family member is an aging parent who would otherwise be living in an assisted living facility, it is relatively easy to look at the costs of local facilities. For others building a new cottage may be less expensive than remodeling their existing house to more closely meet their needs. For example, new cottages can incorporate universal design components to assist those with mobility impairments.

Many people plan to use their cottages to generate rental income. In this case, a careful consideration of the rents in your area and anticipated costs can help you establish a budget range. And increasingly people are using condominium agreements to sell DADUs separately from the primary residence. These are five recent condominium sales of DADUs in Seattle.
https://www.redfin.com/WA/Seattle/11040-1st-Ave-NW-98177/unit-B/home/168914668
https://www.redfin.com/WA/Seattle/4536-Eastern-Ave-N-98103/unit-B/home/160472609
https://www.redfin.com/WA/Seattle/8511-2nd-Ave-NE-98115/unit-B/home/168660388
https://www.redfin.com/WA/Seattle/3202-NW-70th-St-98117/unit-2/home/168674693 (The primary residence sold as well)
https://www.redfin.com/WA/Seattle/538-B-NE-92nd-St-98115/home/169451063

In the past real estate appraisers have struggled with how to value backyard cottages and other ADU's primarily because there were simply not enough comparable sales to serve as a guide. With the sales of DADUs as condominiums and the sale of houses with houses becoming more common that task is getting easier.

dadu permit times and pre-approved plans

Thank you to everyone who joined us at the Seattle Adu Fair last Saturday. It was great to meet so many of you in person.

We've fielded a lot of questions about Seattle Department of Construction and Inspections (SDCI)'s permitting times and how pre-approved plans for DADUs may affect them. To answer these questions, we have been crunching the numbers. The good news - there's been significant improvement since DADUs were given a high priority this fall, reducing the amount of review and processing time to get a construction permit by 50% from this time last year.

What about pre-approved plans?

The Office of Planning and Community Development (OPCD)'s Pre-Approved Plans for Accessory Dwelling Units fact sheet states that pre-approved plans can receive a building permit in 2-6 weeks (pre-approved or standard plans have already been reviewed for ordinance, structural (O/S) and energy). The city's hope is that by having these reviews completed beforehand, permit review times will go down - which seems logical but unfortunately doesn't align with our experience which indicates the O/S and Energy reviews are not driving overall permit approval times.

To analyze this, we reviewed permit histories from similar DADUs both recently permitted (indicated in gray) and those from this time last year (indicated in yellow) to see what was driving permit timelines. In the nine projects we examined, the O/S and Energy reviews only increased permitting time twice. And in those instances the delay was minor averaging only 3 days.

Removing the delays caused by O/S and energy reviews, the average review and processing time for a DADU permit is 46 days (excluding time from submittal to intake). The review and and processing time including O/S and energy reviews is 49 days. Unfortunately, means that pre-approved plans do not significantly affect the time-frame. A realistic time-frame for pre approved plans being 7-10 weeks, significantly longer than the 2-6 weeks stated by OPCD.

There is good work being done to tighten permit timelines

The OPCD's Pre-Approved Plans for Accessory Dwelling Units fact sheet states that the typical DADU permit takes 4-8 months. This includes the 4 months required to secure a permit intake date. To improve this, SDCI recently announced the intake express which promises all intakes will take place within 2-3 weeks. Using the intake express time-frame, and the data on permit processing time shows us that there is no significant difference in review and processing time for pre-approved or custom designs. A realistic time-frame for review and processing of custom designs being 7-10 weeks - significantly less than the stated 4-8 months.