Arizona’s ADU law: What it means for marketability and value
The ability to build a casita can broaden a property’s appeal. Its contribution to market value still depends on the property and what buyers in that market actually pay.
What changed in Arizona?
Governor Katie Hobbs approved HB 2720 on May 21, 2024. The law directed cities and towns with more than 75,000 residents to adopt regulations allowing at least one attached and one detached accessory dwelling unit where a single-family dwelling is allowed. It also sets an allowable size of up to 75% of the main home’s gross floor area or 1,000 square feet, whichever is less. The statute limits certain local barriers, including extra parking requirements solely for an ADU and restrictions on separately leasing the units as long-term housing.
The law does not replace building, fire, health, or safety rules. Private covenants may still matter, and specific lots can raise questions about easements, airport areas, access, and permits. Before designing a project, owners should confirm their parcel’s current requirements with the city and review recorded restrictions.
Could an ADU make a home easier to sell?
Potentially. A legal, functional ADU may appeal to buyers seeking space for relatives, a separate work area, or long-term rental flexibility. Privacy, access, utilities, the quality of construction, and the size of the remaining yard all shape that appeal. The same ADU can be a strong feature in one neighborhood and less influential in another.
There is also a difference between an existing permitted ADU and the possibility of building one later. A buyer may pay more for a finished, usable unit; the value of unused development potential is less certain and depends on feasibility, costs, and local demand.
How does an appraiser measure its value?
An appraiser considers the entire property and looks for sales showing how buyers reacted to similar ADUs. When comparable sales are scarce, the analysis may use the best available market evidence and explain its limitations. The ADU’s legal status, layout, condition, utility, and relationship to the main home all matter. The price to build it is useful context, but cost is not necessarily its contribution to market value.
A permitted ADU can expand a home’s uses and its pool of interested buyers. The value contribution is a property-specific conclusion supported by market evidence—not a fixed percentage, a guaranteed return on construction, or simply added square footage.
If you own a property with an ADU, keep permits, plans, utility information, and any rental details together. They help an appraiser understand precisely what was built and how it can be used.
Sources & scope
Arizona HB 2720, Chapter 196 (2024) · A.R.S. § 9-461.18. Legislative summary is general; confirm current parcel rules with the relevant jurisdiction. Marketability and value discussion reflects appraisal principles, not a valuation of a specific property.
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