Cottage's ADU Impact Report - Seattle's ADU Boom

It’s no secret: from San Diego to Seattle, ADUs are exploding across the West Coast. But just how rapid is this growth? Cottage’s team of ADU experts dug into permitting data and uncovered some compelling trends across the ADU market. Here are our high-level findings:

• Despite higher interest rates, demand for ADUs across the West Coast is growing
• There remains a notable gap between ADUs that start the permitting process and the number of ADUs that actually get built
• With a 25% year-over-year increase in ADU permits submitted, Seattle’s ADU growth outpaces any California market

ADU demand in the greater Seattle area is growing at a staggering rate, but notably, completions are lagging. Enter: Cottage. After delivering hundreds of projects across California, we recently launched in the greater Seattle area to help more homeowners get their ADU project across the finish line. Read the announcement here.

With that, let’s dive into the ADU data!

This is part 2 of our ADU Impact Report series. See part 1 here.

ADU Demand Remains Strong Across the West Coast

As we highlighted in the first installment of our ADU impact report, California continues to be the nation’s leader in ADUs. In 2022, California homeowners applied for over 30,000 ADU permits – twice as many as in 2018, the year before statewide ADU reforms went into effect. Beyond this record-breaking permit count, 1 in 6 houses built in California in 2022 was an ADU.

But ADUs are taking off elsewhere across the country, including in Chicago, Miami, and across Montana. Of all of these, Seattle is the biggest hotbed.

Seattle’s ADU Growth Outpaces Any California Market

Seattle’s ADU market is growing faster than any metro area in California. Demand for ADUs across the greater Seattle area has skyrocketed over the past few years, in big part thanks to new regulations encouraging the construction of ADUs. The Seattle metro area saw 2,254 applications for ADU permits in 2022, representing a 25% year-over-year increase – which far surpasses yearly ADU growth in all major California metros.

apita than Los Angeles.

The City of Seattle is by and far the leader when it comes to permit applications and ADUs built. Over the past six years, Seattle has received 62% of the greater metro area’s ADU permit applications, despite representing only 20% of the metro area’s population. In 2022, Seattle had more than twice the ADU permits submitted per capita than San Diego and the Bay Area, and 72% more ADU permits submitted per capita than Los Angeles.

Similar to California, in the Seattle area, new ADU legislation has played a key role in the spike in ADU demand. In 2019, the City of Seattle passed a bill that removed regulatory restrictions on ADUs, and Mayor Durkan also signed an Executive Order to further encourage the construction of ADUs. Furthermore, Washington passed a statewide bill in February 2023 that requires cities and counties to allow ADUs in urban areas. We expect to see this new legislation further accelerate ADU growth in the Seattle area and across Washington, just as California’s similar statewide bills have over the past few years. Significantly, the growth of Seattle metro’s ADU market far outpaces any metro in California following the passage of new legislation.

It’s undeniable that Seattle is seeing an ADU boom, and that’s why Cottage has expanded to the greater Seattle area. We’re thrilled to partner with the ever-increasing number of homeowners in Seattle to build more housing in the region.

There’s a Gap in ADU Projects that Start, and Those That Actually Get Built

Across markets, there is a stark gap in the number of ADUs that start the permitting process and the number of ADUs that actually get built. Part 1 of our ADU Impact Report. found that of all the ADU permits submitted in California since 2017, only around a third resulted in a completed ADU.

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As we dug into Seattle’s ADU data, we found the same trend. Only 37% of ADUs that submitted a permit application between 2017 and 2021 were actually constructed. And this gap is only widening. As the number of ADU permits submitted increased each year during this same time period, the proportion of projects that completed construction decreased.*

Like we have seen across California, the Seattle metro simply isn’t keeping up with the rising market demand for ADUs. This trend is a clear indicator of the challenges that come with getting an ADU across the finish line. First, homeowners are not often equipped with the knowledge and resources to navigate the complex ADU process. Second, local municipalities – which permit ADUs – aren’t often equipped to handle the ballooning number of ADU permit applications. Paired with the often arcane and unique requirements set by each municipality’s permitting authorities, many ADU projects are held up at this stage. Finally, the construction phase can be a bottleneck too: not enough local contractors have the ADU expertise needed to deliver at scale.

Cottage exists to guide homeowners through every step of the ADU journey – feasibility, design, permitting, and construction – to get them their ideal ADU. With over 100 ADUs under our belts and hundreds more in the works, Cottage is poised to help more homeowners in Seattle successfully complete their ADU project.

*Data from 2022 has been excluded, as we can assume projects that submitted permits in 2022 may still be in the permitting or construction process.

On the Horizon

Cities across the US are following suit in encouraging the development of ADUs. As cities like Chicago and Miami introduce new legislation in favor of ADUs, we’re eager to see the impact of new policy on the ADU market across the country.

Jurisdictions across the US that would like to capitalize on the benefits of a streamlined ADU process should include the following in their policy:

• Expedited permitting processes for ADUs, like ministerial (by-right) permitting, which creates objective standards for what is allowed.
• Waiver of development or impact fees to lower costs associated with building an ADU.
• ADU grant programs similar to CalHFA, which allocates a fixed amount for homeowners to use towards the costs of creating an ADU.
• Digitized submission and permit management process that eliminates the need for time-intensive printing and traveling to and from the city.
• A predictable and transparent plan review process/timeline and the ability to offer an expedited (our outsourced) plan review process for an additional fee.

The data in this report is clear: the demand for ADUs is expanding quickly, and the combination of smart policy and solutions like Cottage can help add much-needed housing for our communities, across the West Coast and beyond.

About the Data

Our conclusions and findings come from permitting data made available by municipalities across California and Washington, and has been aggregated and verified by Cottage’s team.