The Rise of the Backyard Mini-Home: From Sears Kits to Modern ADUs
The dream of affordable homeownership has taken many forms throughout history. In the late 1800s, a hopeful homeowner might have flipped through a Sears, Roebuck and Company mail-order catalog, envisioning a five-bedroom Craftsman-style home delivered directly to their nearest railway depot. For a mere $1,945, they could acquire everything needed – lumber, siding, windows, doors, shingles, flooring, and even the coveted kitchen sink. The catch? Self-assembly was required.
Today, that spirit of accessible housing lives on, albeit in a more compact and contemporary package: the Accessory Dwelling Unit, or ADU. These tiny backyard buildings are popping up across the nation, offering solutions for multi-generational living, home offices, or supplemental rental income.
Catherine MacNeal’s Vashon, Washington, studio provides a perfect example. Her 12-by-16-foot retreat, nestled amidst a lavender field, was sourced from Studio Shed, a Boulder, Colorado-based company specializing in eco-friendly prefabricated structures. With sleek, modular design, French doors, and expansive windows offering stunning mountain and water views, MacNeal’s ADU serves as a luxurious getaway. Featuring a Duxiana bed, kitchenette, and bathroom, it provides easy access to boating and kayaking adventures.
MacNeal rents out her "Betty’s Blue" studio on Vrbo.com for $140 to $165 per night, generating an annual rental income between $22,000 and $27,000. “Because it’s small and easy to clean, I usually do it myself, so overhead is minimal,” she explains. “And there are only a few amenities and improvements each year.”
Studio Shed manufactured MacNeal’s ADU in their factory, ensuring compliance with local government codes. The unit arrived as a kit, including drywall, lighting, flooring, paint, appliances, cabinetry, countertops, and finishing touches. A Studio Shed contractor handled the foundation, ADU assembly, interior trimming, and deck construction. Local technicians completed the bathroom, electrical wiring, and heat panel installations – all contributing to the overall cost.
Rene Daniella, a homeowner in Los Angeles, experienced the benefits of ADUs firsthand. Her property already included an ADU, which she rents to family and friends for $3,000 per month, or about $125 per night. “The rent is a substantial portion of my monthly mortgage, so it’s a great investment,” she notes.
The story of Studio Shed’s rise reflects the growing interest in ADUs. In 2008, Jeremy Nova, the company’s co-founder, initially sought a storage solution for his mountain bikes. Today, his company produces 500 Studio Sheds annually, with prices ranging from $39,000 for a basic 12-by-16-foot studio to around $250,000 for a two-bedroom unit.
While the base price of the ADU might seem appealing, prospective buyers should be aware of additional expenses. “The major expenses outside of our kit are the foundation and the cost to connect utilities to the site,” Nova cautions. “Our prices include the plumbing and electrical work inside the building but not the cost of trenching and installation of those utilities to the site.”
Studio Shed is not alone in recognizing the immense potential of the ADU market. Dwell offers ADUs starting at $439,000, while Cottage’s offerings begin at $200,000, and Abodu’s at nearly $230,000. Even Airbnb co-founder Joe Gebbia’s company, Samara, is entering the fray, offering a studio ADU starting at $279,000.
“The demand for ADUs increased steadily prior to the (COVID-19) pandemic and continues to grow,” observes Gregg Cantor, president and CEO of San Diego-based design and construction firm Murray Lampert. “Zoning, parking and building regulations are favorable for ADUs here.”
In San Diego, where the median home price exceeds $1 million, ADUs have become particularly popular as rental units. Cantor estimates that a typical detached ADU takes approximately six to eight months to build, depending on site conditions, architectural complexity, and desired finishes.
Before diving in, Cantor advises conducting a thorough feasibility study to identify potential surveying, soil engineering, utility upgrade, or right-of-way improvement requirements.
Securing the necessary permits involves submitting detailed construction documents to the local municipality. Nova emphasizes the variability of the permitting process. "In some areas of the country the permit process takes a couple weeks, in others it can take as long as six to nine months," he says. “Laws governing ADUs are mostly at the local level and all states allow them in some form in some places. It’s a pretty regional patchwork of regulations.”
The rental income potential of an ADU depends on factors such as location, size, and the number of bedrooms. Cantor believes that "in the short term, the added value of an ADU to an existing property is at least equal to the cost of the work.”
The fully furnished ADUs built by Murray Lampert encompass design, permit fees, and construction costs, with prices ranging from $200,000 to $500,000.
Cantor concludes, “In San Diego, real estate values have continued to rise and there’s a housing shortage. Long term, ADUs add value and passive rental income, making properties worth more in resale.” The ADU trend signifies a shift towards creative housing solutions that address affordability, space constraints, and evolving lifestyle needs, offering a modern twist on the mail-order home dream.
