ADUs in Los Angeles: Where are they located and by how much do they raise property value?

Abstract

Using data from Los Angeles, this article explores the locational determinants as well as the assessed-value effects of the presence of accessory dwelling units (ADUs). The results show that ADUs are less likely to be found on large parcels containing newer houses and at dense locations near the CBD, the LAX airport, and beaches. ADU presence is more likely close to commercial districts, light-rail stations, and educational establishments but less likely in higher income areas and Black neighborhoods, although parcels in Latino neighborhoods are more likely to contain ADUs. The assessed-value regressions show that ADU presence raises a parcel's assessed value and selling price by 7%–9%, while also accurately capturing the unusual rules for property assessments under California's Proposition 13.