The Hidden Stock of Affordable Housing

This paper explores the potential of accessory dwelling units (ADUs) to address the housing affordability crisis, a challenge facing many nations. The high density and regulatory context of Israel make it a globally relevant “laboratory.” Utilizing rental listings from the pre-COVID period (2012–2019), we analyze the prevalence, distribution, and affordability of ADUs compared to standard rentals. The findings indicate growing ADU shares, whether fully legal or not, which function as a substantially more affordable housing segment. The clear evidence of greater affordability at lower public cost highlights the need to reassess restrictive regulations, unlocking ADUs’ potential to address housing affordability challenges.