Accessory dwelling units, which are independent residential spaces located on the same lot as a single-family home, are often discussed as a potential solution to prolonged housing shortages and affordability issues. However, most ADU projects tend to be high-end, standalone projects that lack economies of scale and sometimes present access challenges. As a result, they have so far done little to offset affordability challenges, according to a think tank hosted by John Burns Research and Consulting's New Home Trends Institute.

Typically, ADUs are less than 1,000 square feet, have 1-2 bedrooms, and provide private entrances and HVAC. They are often touted as an ideal solution for seniors.

California has led the nation in ADU construction in large part thanks to supportive legislation enacted in 2016. Construction spiked in the state from 3,000 units in 2018 to nearly 23,000 units in 2023.