Boomers get heat for staying in big homes — but this couple downsized into a 'granny pod' in their daughter's backyard. Would it work for you?

That’s why there’s growing demand for out-of-the-box housing solutions that allow retirees to downsize, live close to family and even accommodate aging in place — without breaking the bank.

For example, when Patti and Gary Christie retired, they were ready to downsize and began looking for a new home close to their daughter, Caitlin Swann, in Fairfield, Connecticut.

“We looked at houses, but what they would get for what they would have to pay was a little depressing,” Swann, 42, told Business Insider. That’s when she stumbled across an ad for a “granny pod,” a type of accessory dwelling unit, or ADU.

Now, after her parents built a custom cottage that sits on her property, Swann sees them daily when they aren’t wintering in Florida and gets additional support with her kids while her husband commutes into Manhattan. It’s a win-win for everyone.

The rise of the granny pod

For retirees, rather than moving into an adult child’s home, or, conversely, having an adult child move back into the family home, an ADU offers an alternative multigenerational living arrangement that allows everyone to have their own space and could save money in the long run.

An ADU is a secondary residential unit that sits on the same lot as the primary home (which means it can’t be bought or sold separately). ADUs include in-law suites, basement apartments and converted garages, among others.

A granny pod, more specifically, is a small, standalone home on the same property, usually in the backyard. It can be temporary or permanent; prefabricated or custom-built. It can be designed for aging in place or to provide care to an aging loved one while still allowing for privacy and independence.

While small in square footage, a granny pod includes everything one needs for independent living, including a living space, kitchen, bedroom and bathroom. It could also include safety and accessibility features for aging in place, such as handrails, slip-resistant floors and rounded countertops — even a defibrillator. Wide doorways could also accommodate a wheelchair.

Plus, there aren’t any stairs to navigate.

When compared with the cost of in-home care or an assisted living facility, a granny pod could offer an affordable alternative. In 2025, the median cost of a non-medical caregiver was $6,673 per month, while a space in an assisted living community was $6,200 per month, according to CareScout.

Down the road, if the granny pod is vacated, it can still serve a variety of purposes, from a backyard office to a guest house to a long-term rental property that brings in passive income. It could even be converted from a granny pod to a living space for a college-age kid who still lives at home.

Costs and other considerations

While you can custom-build a granny pod, you can also buy or lease a pre-fabricated tiny home, either new or pre-owned. You can assemble it yourself or hire a professional.

Businesses such as FabLab, Cottage Depot and WheelPad offer ADUs that could be used for aging in place. Costs range widely, from $40,000 to $125,000 for a prefab unit to more than $250,000 for a custom-built granny pod, according to Redfin.

There are other costs to consider, such as foundation work, utility connections, landscaping and building permits, which can range from $15,000 to $35,000, according to Redfin, while interior finishes can add another $40,000 to the tab.

Other considerations include zoning laws, building codes and permits. For example, local zoning laws may not allow for an ADU on your property. If they do allow for it, there may be size and height restrictions. Homeowners’ associations might also have their own rules about what is and isn’t allowed.