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Three ways ADUs Go Easy on the Environment 

Homeowners thinking about adding freestanding ADUs (accessory dwelling units, a.k.a. in-law apartments, granny flats, or cottages) tend to focus on creating much-needed space without knocking down walls in the houses they’re living in, the addition of rental income, and other practical considerations. The political can also come into play: ADUs provide low-profile, distributed housing, quietly preserving a street’s character and avoiding the ire of neighborhood associations. 

In addition to the practical and the political, a third factor plays a role – or least should – in the ADU calculus: the environmental. The environmental advantages of ADUs sort themselves into three broad buckets. The first involves the efficiency of the finished ADU itself; the second is about the benefits of a smaller physical footprint; and the third support greater housing density the distributed, smaller footprints of ADUs enable. 

Efficient from the ground up

Freestanding ADUs tend to be much more efficient than the single-family homes they augment. ADU building envelopes typically include above-code insulation and weatherizing with such features as Zip System wall sheathing, OSB with rubberized membranes, and ultrahigh-efficiency doors and windows. ADUs comply with strict building-code standards, which demand that additions and new homes – including ADUs – have enough solar panels to achieve net-zero energy consumption. In addition, ADUs boast tankless water heaters as well as highly efficient mini-split HVAC systems that handle both heating and cooling, and appliances tend to be both right-sized and Energy Star rated.  

The high-volume, factory-based production of ADUs also enables a strikingly precise alignment of inputs to outputs. In fact, the waste from the onsite construction of a modular ADU is measured in garbage cans, not dumpsters. That same precision and scale can also enable the efficient recycling of metals and the composting of clean wood waste.  

Taken together, a well-built ADU is built tight and runs lean. That translates directly into low utility bills; indirectly, it allows our built environment to tread more lightly on the planet.  

Physically (and environmentally) small

When it comes to environmental footprint, a structure’s size matters. A detached ADU of 700 square feet is estimated to have just half the long-term environmental impact of that 2,262-square-foot house. 

There are knock-on benefits to going small too. There’s less room to store the stuff that accumulates into the clutter that Marie Kondo has made a career out of curating. Less room means fewer, more deliberate purchases, and less shopping means less embodied energy in the products themselves and, later, less landfilling. As I prepare to move into a 1,000-square-foot prefab home with my family of four, I can attest unequivocally that space constraints modify shopping behavior – for the better, in my opinion. 

Low-profile density

ADUs are a thoughtful way to address growing populations. While development on urban fringes consumes open space, reduces natural wildlife habitats, increases air and water pollution, and brings greater risk of mass destruction from wildfires, ADUs in yards closer to downtown translates into less need for cars and more opportunities for public transit.  

A 30-mile commute at 23 miles per gallon yields about 2.5-ton annual carbon savings per ADU from commutes not taken. Together, that’s about 42 U.S. households worth of emissions. 

There is no shortage of greenwashing in the construction industry, with bold claims about the sustainability of certain materials or techniques that don’t stand up to deeper scrutiny. The environmental advantages of living smaller and more thoughtfully, however, are undeniable.  

Backyard studio spaces for work, creativity, or living allow us to extend the life of our existing homes to work in more modern ways. Prefab construction at scale results in meaningful reductions in waste and degradation of the environment. An embrace of these structures at the municipal level will be a key element in solving our housing crisis in a way that results in more livable communities that tread ever more lightly on the planet.  

 

Jeremy NovaJeremy Nova is co-founder and creative director of Studio Shed. A longtime professional mountain bike racer who competed in the 2004 Athens Olympics, Nova built the first Studio Shed to store his many wheels. His passion for smart design, efficiency, engineering, and architecture has buoyed Studio Shed’s growth into the only ADU maker that ships nationwide for installation by a comprehensive network of certified installers. 

How COVID-19 has impacted the housing market in Colorado

The novel coronavirus (COVID-19) continues to negatively impact the economy, and the housing market is not immune.

Nationally, the housing market continues to shrink as the National Association of Realtors recently reported. Existing home sales fell again in May, marking a three-month decline in sales as a result of COVID-19.

Overall, home sales fell year-over-year and are down 26% from May 2019. 

In July, there seems to be a market rebound as consumer confidence begins to rise and as mortgage rates hover around historic lows.

Those mortgage rates continue to boost homebuying demand and refinancing activity has picked up as a result. Mortgage applications to purchase a home were up 33% year-over-year in the first week of July, according to the Mortgage Bankers Association’s seasonally adjusted index. This continues to push homebuyers into the market, and this is especially true in Colorado. 

What’s happening in the Colorado housing market?

In terms of the housing market, Colorado has been an anomaly compared to the rest of the country. Our residential real estate market has remained strong despite the pandemic.

In fact, Denver has a housing shortage, which continues to make it a hot market and boost current homeowners’ optimism for selling as there is a lack of supply in the area.

While this supply dipped in April, the July report from the Denver Metro Association of Realtors shows a surge in new listings, up 17% year-over-year. And while home prices were holding steady through June, they are now on the rise as Denver is turning into a strong seller’s market. 

In Denver, people were searching for homes again in June as the economy opened back up and as record-low mortgage rates remained intact.

Real estate agents closed nearly 60% more home sales in June compared to May, and housing prices are still up compared to 2019.

However, the issue of low inventory in the housing market is not new to Colorado and it is what has kept the market hot despite a global pandemic. 

A summer housing boom

Colorado has always been a strong market for vacation homes and that demand is growing, as the pandemic has caused more people look to experience the outdoors.

Further, the pandemic essentially pushed the ‘spring market’ back, and we are starting to see a rebound in the summer months. While realtors are not hosting open houses, many have turned to one-on-one home tours and virtual showings.

According to the Colorado Realtors Association (CAR), virtual tours have increased demand and shaped a new reality for real estate transactions as more people are buying homes without physically seeing them first. 

What our experts are seeing

Even before the COVID-19 pandemic, banks were working with buyers to get them pre-approved and ready to go in this hot market. This has not slowed down much for our buyers during the last several months.

At UMB Bank, our Colorado clients’ average mortgage loan is around $1 million, which requires a jumbo mortgage. A mortgage is considered jumbo if the dollar amount falls above a certain limit, usually above half a million dollars. 

COVID-19 did not have a big impact as inventory has continued to outpace demand, and we believe the rate cut for Denver will keep the purchase market hot and put more consumer dollars into it. There are lots of people looking to take advantage of the low rate environment for either their first home or second home.  

It’s important to remember that it could take anywhere from six months to a year for the market to fully show the impact of the pandemic. But for now, the Colorado housing market remains in a good position. First time buyers should prepare to fight multiple offers, and many people are still on the hunt for a new house, as the need for home offices or simply more space has become apparent for those who are spending more time at home. 

COVID-19 has impacted the economy and daily life in a number of ways, but the Colorado housing market has remained strong in spite of it.

If you’re looking to buy a home, be sure to work with a financial partner who understands the nuances of this unique market and will get you thoroughly prepared to navigate the sometimes tricky terrain. 

Brad Swanson is a senior vice president and private banker at UMB Bank in Denver and can be reached at [email protected]. Narine Avanesova is a vice president and private banker at UMB Bank in Denver and can be reached at [email protected]