Tiny homes cause a stir in some Twin Cities suburbs, but few actually built

Neighbors are so curious about the construction happening in Susan Eder Cunningham’s yard that she put up a sign with a link to the blog where she explains what it’s like to build Golden Valley’s first detached accessory dwelling unit.

“Being the first one, you never know how the neighborhood is going to react,” said Cunningham, who plans to rent out the main house and spend her retirement in the tiny home. “I want them to be invested in it.”

More Minnesota cities have greenlit the structures, known as ADUs, as leaders try to tackle housing shortages without adding so much density it changes a neighborhood’s feel. They have grown in popularity across the country, with California, Oregon and, most recently, Iowa permitting them statewide.

But while construction of the backyard dwellings has exploded in other metro areas, they have been slow to take off in the Twin Cities. Industry experts cite high costs, strict city regulations and opposition to added density as barriers.

Many suburbs that allow ADUs — such as Edina, Bloomington and Burnsville — have only approved one or two of them in recent years, according to Metropolitan Council data tracking building permits from 2016 through 2024. And some cities that have OK’d a larger number of permits, including Minnetonka and Crystal, report that many are for interior ADUs, such as basement or garage apartments.

While the dwellings can start in the $200,000 range, Cunningham’s 900-square-foot ADU, with an attached garage, will cost $400,000. The custom-made home, featuring large windows and turquoise floor stain, is designed to be energy efficient and wheelchair accessible.

“The cost per square foot is higher for an accessory dwelling unit than for a conventional single-family home,” said David Morley, with the American Planning Association.

The City Council voted down the permit and put a yearlong moratorium on ADUs to reconsider the rules. Pepin is now suing the city.

Several cities said they’ve had residents request ADU permits then withdraw applications due to costs and restrictions.

“It’s not a silver bullet to address the housing shortage,” said Simon Opatz, government affairs director with the St. Paul Area Association of Realtors. “But it’s one of the many ways we can work to alleviate that problem.”

Some real estate agents say they’ve been fielding more requests from homebuyers seeking a property with an ADU, often to provide an alternative to assisted living for an aging relative or cheaper housing for children graduating from college.

But there aren’t many on the market.

In the Twin Cities metro area, nearly 300 ADUs have been permitted since 2016, with more than a third of them in Minneapolis, according to the Met Council data.

Met Council researchers say the data set provides the most complete look at ADU permitting throughout the area, though some units, such as those approved through separate conditional use permits, might not be captured.

Minnetonka and Plymouth both allowed interior ADUs for decades, but more recently updated their laws to permit detached dwellings. Julie Wischnack, Minnetonka’s community development director, tallies about 80 ADUs in her city.

Nichol Dehmer, founder of the company YardHomes, which builds modular ADUs, counts 57 cities and two counties allowing ADUs in Minnesota.

“People think an ADU is a quarter the size of the house, it should be a quarter of the price,” Dehmer said. “But in reality when you buy an ADU, you’re keeping all of the expensive stuff in a house, like HVAC, utilities, the kitchen, and just getting rid of the space.”

“It sounds more appealing than it sometimes logically makes sense,” DeWit said.

ADU rules for size, setbacks and parking can be strict and also vary across the metro, making it difficult for some to get a project done.

“I had to share with the city the specifics of the size of my dog door,” Cunningham said of her Golden Valley ADU. “That was a fun day.”

Community leaders say ADUs can be part of the housing shortage solution.

But they say home prices, the availability of land, financing and incentive options and attitudes toward infill development have contributed to Minnesota’s slow ADU growth compared with cities on the West Coast, including in California and Oregon.

Dehmer said Minnesota’s approach to affordable housing has been more focused on “big impact and more of a multifamily approach. The scattered site approach isn’t really popular here.”

Cottage communities of tiny homes — an idea that’s gained traction with some churches — could be more feasible for affordable housing, some Realtors said.

In Golden Valley, Cunningham wanted an ADU so she can keep her land, rent out her main home and remain in her community.

“To me, it’s long-term planning,” she said. “I love this neighborhood, and I want to age in place.”