Part 2 - Unlocking the Potential of ADUs: Why Aren’t More Being Built?
By John Phillips of Verdant Living. Published Jun 13, 2025. Read time: 3 min.
ADUs and their value
Accessory Dwelling Units, or ADUs, are also called mini homes. They use an existing residential property and create a separate living space.
They are often used for intergenerational housing, such as for aging parents or young adults starting out. They also can add long-term rental value and increase real estate value.
Denver example
- Since June 2015, Denver has issued 528 ADU permits.
- Of those, 418 received Certificates of Occupancy.
- The article says there are thousands of possible sites in Denver.
- Outside Denver, the article says there are just a few ADUs scattered around, with tens of thousands of possible sites.
Why more ADUs are not being built
- Zoning rules: ADUs were long discouraged by restrictive local zoning.
- Regulatory complexity: Requirements can include soil testing, setbacks, size limits, parking, utility fees, and construction inspections.
- Cost: Even the least expensive ADUs are not trivial in cost for most homeowners.
- Financing: Lenders are not yet fully comfortable with ADU lending, and few actively offer it.
- Time: From contract to certificate of occupancy can take a year or longer.
- Market awareness: Many homeowners do not know ADUs are an option.
- Vendors: In Colorado, the vendor and service-provider ecosystem is still small and hard to find.
Legal and market changes
The article says state laws have begun to override local zoning regulations. It notes that Colorado passed such a law last year, and that it takes effect in July.
Even with that change, the article says there is still a long way to go in education, financing, and implementation.
Broader point
ADUs are described as “gentle density.” They usually appear one at a time and do not change neighborhood character much.
But adoption depends on individual homeowners having the need, the desire, the time, and the willingness to manage construction risk and another mortgage or major decision-making burden.
People thanked for input
- Gary Fleisher, Modular Home Source
- Kol Peterson, Accessory Dwelling Strategies
- Renee Martinez-Stone, Denver Housing Authority and West Denver Renaissance Collaborative
- Eric Scott, TinyMod