Restrictions around ADUs have eased, but the impact of these new builds on the housing shortage is still "a drop in the bucket."
If you've driven through Los Angeles recently, you may have noticed a glut of new-construction projects taking place on residential properties.
But many of these projects aren't brand-new homes. Instead, they're what's often referred to as accessory dwelling units: construction projects meant to expand an existing property by adding square footage through a garage conversion or a backyard addition.
In L.A., in particular, the ADU market has exploded in recent years. A new report from the University of Southern California's Lusk Center for Real Estate found that Los Angeles County completed a record 10,230 ADUs in 2025. That's a massive increase from 2018, when just 1,623 units were built.
While overall housing production across the county dipped slightly in 2025 to 27,293 units (down from 28,498 in 2024), the USC report found ADU construction continued to climb.
ADUs accounted for 37.5% of all newly certified housing units last year, marking the highest share recorded in the nearly 10 years USC has tracked the data.
Why ADUs are booming
For years, restrictive zoning laws, complex permitting hurdles, and strict development limits made adding a secondary unit to a single-family housing unit a daunting project.
Communities that have traditionally resisted ADU projects cite traffic and parking congestion, population density, and privacy concerns—and their attendant impact on property prices.
Despite those concerns, four new laws took effect earlier this year, barring local jurisdictions from adopting ADU rules stricter than state policy and removing many barriers that restricted the construction of additional dwellings.
ADU projects—sometimes known as "granny flats" because extended family members often move into them—can still be prohibitively expensive.
According to R&D Builders of Woodland Hills, CA, garage conversions in Los Angeles may start at $25,000 for a basic conversion without plumbing, while a full-scale conversion complete with a bathroom could run as much as $200,000. A detached backyard ADU could run as much as $350,000.
C&C Partners, a Los Angeles–based design-build architecture firm, says they're getting requests for more ADUs as homeowner priorities shift. In nearly all of their Palisades fire rebuilds, and about half of their current projects, clients are adding an ADU.
"Homeowners want detached units under 500 square feet," says C&C founder Patrick Cunningham. "These compact one-bedroom or studio layouts often feature hideaway beds, smart storage, kitchenettes, and outdoor-access baths that double as pool baths. Sliding or folding doors opening to a backyard or a private yard are in high demand."
ADUs can include small backyard units like the one seen above. Los Angeles County completed a record 10,230 ADUs in 2025—a massive increase from 2018, when just 1,623 units were built. (Los Angeles Department of Building and Safety) Devang Shah, principal at Genesis Builders, works with a lot of clients rebuilding after the Eaton Fire in Altadena. He says many are looking to add ADUs to their builds.
"We're seeing a clear pattern: Nearly 65% of our clients are choosing to add an ADU to their property—not just to restore what was lost, but to come out ahead," Shah says. "The motivations vary. Some want rental income to help offset housing costs. Others are planning ahead, so they can eventually move into the ADU and rent out the main house, or they need space for aging parents or family members. For nearly all of them, it's also about long-term property value."
But are these new ADUs easing L.A.'s tight housing market?
The city is working toward increasing its housing supply by 812,000 units by 2029, but the increase in ADUs is barely making a dent, says Jared Schachner, the report's research director and an assistant professor at the USC Price School of Public Policy.
"Even if the trend is moving in the right direction, the scale of the gap between where we are and where we need to be in terms of the regional goals is so vast that the ADU impact is ultimately a drop in the bucket," says Schachner.
Schachner also stresses that many ADUs aren't even making it to the market.
“It’s not clear entirely whether these ADU units are being rented out on the private market, like another type of rental housing unit ordinarily would be,” he adds.