How Much Value Does a Guest House Add?

The Value of an Accessory Dwelling Unit (Casita)

Guest houses are rare and it shows.

We initially started researching this issue because we had a client interested in a home with a guest house. They were not looking for Mother-in-law Quarters, but rather specifically a totally separate accessory unit. There are a ton of names for these small guest houses and the amount they increase the value of property will astound you.
We initially were not going to publish our finding and keep it proprietary, however, we’ve decided to bring this to the public. You must keep in mind that this data is always changing and the numbers provided here are after sifting through all the properties and removing outliers and anomalies–comparing apples to apples and dealing with limited data. Furthermore, the numbers will change from time to time and adjust with supply and demand. The conclusions are as of the date of this article and from the data available. Obviously the size and condition all are major factors and will change the results, however here is the average data. If you want more current data for your house or your prospective house, get in contact with us and we will assist you with up to date data relevant to your situation. 01/01/2014

An accessory dwelling unit is also known as:
Accessory Apartment
Accessory Dwelling
Accessory Unit
ADU
Ancillary Unit
Backyard Cottage
Carriage House
Casita
Garden Suite
Granny Cottage
Granny Flat
Granny Unit
Guest House
In-law Unit
Laneway House
Mother-in-law Flat
Mother-daughter House
Multigenerational Homes
Secondary Dwelling Unit (SDU)
Secondary Suite
Second Unit
Secondary Unit
Sidekick
Two-family House

Whatever the name, there is little disputing the increase in value they bring to a property.
Here are the conclusions we have come to: Over the entire Phoenix metro area the difference in the average sales price for a home with a casita and one without is $103,000. Now you can’t stop reading here. That could potentially be a misleading number. We dug a little further and found that homes built from 1940-1950 had a difference of $50,000, 1950-1970 reflect a $55,000 difference, and from 1970-1990 there is a $68,000 difference.

How much does your accessory dwelling add to your Property value.

How much does your accessory dwelling add to your Property value.

In order to be fair, we need to realize that the value of houses, broken up by decade, look very similar because newer homes are more expensive than older homes due to the deferred maintenance costs. This data is still useful to show that accessory units do add significant value. The chart below is the data for a casita’s added value broken up by city. As you can see from the number, in some cities it pays more than others to have an accessory dwelling unit.

How much value does you accessory unit add to your property?

How much value does you accessory unit add to your property?

While these charts are fun to look at, data for your specific project or purchase should be evaluated by a professional to see if these numbers still ring true for your specific neighborhood. Yours may be better or worse than the average. Either way, this could be an investor’s niche yet to be developed.

**Disclosure – “Value”, when referred to on this site, should be considered synonymous with price. No appraisal was developed and the Uniform Standards for Professional Appraisal Practice was not followed for the conclusions developed on this site. This should be considered a broker’s opinion of price. Every property is different and if a value of a specific piece or portion of real property is desired, an appraisal should be performed. Do not rely on the data and charts provided unless you consult with an appraiser and have an appraisal performed first.**