The short answer
On average, yes, at least in Los Angeles. A peer-reviewed study of Los Angeles found that having an ADU raises a property's assessed value and selling price by 7% to 9% on average (Brueckner and Thomaz, Real Estate Economics, 2024). What one adds to your home depends on the unit, the home and the market around it.
You'll see much bigger claims online, such as a 20% to 35% premium. We couldn't find a primary study behind them, so we don't repeat them.
What the research shows
- Los Angeles, 7% to 9%. The same study found that ADUs aren't spread evenly: they're less common on large lots with newer houses and in higher-income areas, and more common near commercial districts, light rail and schools.
- California appraisals. The Federal Housing Finance Agency reports a median appraised value of $1,064,000 for California homes with ADUs in 2023, against $715,000 for homes without, in appraisals for purchase loans the agencies back. Those are raw medians of two different groups of homes, not the value an ADU adds. ADUs appeared in 2.9% of those appraisals.
- Neighbors. A study of Los Angeles estimated that when the density of ADUs nearby rises by half a percentage point, prices of homes within a few hundred meters fall by about 3% (Tanrisever, a working paper later published in Regional Science and Urban Economics). It's about neighboring homes, not the one with the ADU.
How an appraiser handles an ADU
- For loans Fannie Mae buys, the ADU's living area isn't added to the main house's. The appraiser reports it on its own line and describes any effect it has on value and marketability. The exception is an ADU inside the house, above grade, with interior access (Fannie Mae Selling Guide B4-1.3-05).
- Fannie Mae allows only one ADU on a one-unit property, none with a two- to four-unit home, and the ADU must be smaller than the house, with its own entrance, kitchen, sleeping area and bathroom (B2-3-04). So a home with more than one ADU may need a different loan. Freddie Mac allows one ADU on one- to three-unit properties (ADU fact sheet).
- Lenders can count part of an ADU's rent toward qualifying for a loan; see how to pay for an ADU.
Unpermitted ADUs
- Fannie Mae treats an ADU as legal if the current zoning allows it. For work done without permits, the appraiser comments on its quality and any effect on value.
- Where zoning doesn't allow an ADU at all, Fannie Mae's rules are stricter: the lender must confirm it won't jeopardize insurance claims, and the appraiser needs comparable sales with the same use.
- Freddie Mac doesn't let rent from an illegal ADU count toward qualifying for a loan.
- If yours was built without permits, see legalizing an unpermitted ADU in Los Angeles.
Property taxes
Building an ADU is new construction for property taxes. The county assessor adds only the value the ADU adds; your home's existing assessed value doesn't change, and a supplemental tax bill follows completion (Board of Equalization). A 2024 bill to exempt the value an ADU adds from property tax for 10 years (SB 1164) died in the Assembly.
Can you sell the ADU separately?
Usually not. A city or county may adopt an ordinance letting owners sell the house and the ADU separately as condominiums (Government Code § 66342), with each lender's consent and, in an HOA, the association's approval. A separate provision lets qualified nonprofits sell ADUs to eligible buyers (§ 66341). Ask your city or county whether it has adopted a condominium ordinance.
See also: whether an ADU is worth it (rent vs cost), what ADUs cost in Los Angeles, how to pay for an ADU, ADU fees.
General information, not appraisal, tax or financial advice. An appraiser or agent who knows your neighborhood can tell you what an ADU would add to your home.
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