The Future of ADUs: Sustainable Home Design in Colorado & Montana

Accessory Dwelling Units (ADUs) – A Growing Trend

Accessory Dwelling Units (ADUs) – also known as granny flats, casitas, or in-law suites – are becoming increasingly popular in Colorado and Montana. Homeowners in urban centers like Denver, Boulder, Fort Collins, Colorado Springs, and Bozeman are adding ADUs for extra rental income or family housing, while rural ski towns and outdoor communities see them as a way to address housing shortages. Below, we explore the latest ADU regulations in these regions, the market demand for ADUs (from short-term rentals to multigenerational living), and how ADUs contribute to sustainability and design, passive solar design, and homeowner ROI.

Evolving ADU Regulations in Colorado

Statewide Policy

In 2024, Colorado passed a landmark law (House Bill 24-1152) that requires most cities to allow ADUs on single-family lots. This legislation (effective by June 30, 2025) overrides many local restrictions and even bans HOAs from prohibiting ADUs. Key provisions include allowing ADUs up to at least 750 sq. ft., no off-street parking requirements, no owner-occupancy mandate, reduced setbacks (5 ft), and no minimum lot size for ADU construction. In short, Colorado is making it much easier for homeowners to build ADUs statewide.

Denver

Even before the state law, Denver had been gradually liberalizing ADU zoning. As of 2023, about 35% of all residential land in Denver was zoned to allow ADUs. The city has been working on a residential building exterior design initiative to enable ADUs in all neighborhoods, aligning with the new state requirements. Notably, Denver eliminated previous rules like owner-occupancy requirements for ADU properties in its recent proposals. With the new state law, Denver and all Front Range communities must allow ADUs in every single-family zone, which city planners see as a tool to increase housing availability.

Boulder

Boulder has been a frontrunner in ADU reform. In 2019, the city expanded ADU allowances to all low-density residential zones and in 2023 further streamlined the process. As of September 2023, Boulder removed many barriers – ADU permits are now handled through a simple building permit process (no special review), and previous limits like saturation quotas were dropped. However, Boulder places emphasis on ADUs serving long-term housing needs: short-term rentals of new ADUs are prohibited (if you build an ADU, neither it nor the main house can be rented for <30 days). This ensures ADUs support local housing rather than becoming Airbnbs.

Fort Collins

Fort Collins updated its Land Use Code in early 2025 to comply with the state law. ADUs are now permitted in every zone district and can be approved administratively. The city explicitly notes, however, that an ADU may not be used as a short-term rental in Fort Collins, indicating a preference for long-term occupancy to help with local housing needs.

Colorado Springs

Until recently, Colorado Springs only allowed ADUs in limited circumstances (they were heavily restricted in single-family zones). This conflicted with the new state mandate, so the city is overhauling its code to open up “mother-in-law” units citywide. City officials acknowledge strong demand for ADUs and are removing “unreasonable” code barriers to meet that demand. By early 2025, Colorado Springs is expected to align with state law and permit ADUs in all single-family residential areas, marking a big shift for the Pikes Peak region.

Mountain Resort Towns

Colorado’s high-country communities (Aspen, Vail, Breckenridge, etc.) have a different take. Many ski towns worry that allowing more ADUs could fuel the short-term rental market and worsen local housing shortages. In fact, Colorado’s new ADU law provides exemptions for certain rural resort communities. Some mountain towns already allow ADUs but with strict rules (for example, Aspen requires ADUs to house local workers or be deed-restricted, and Glenwood Springs caps ADU size at 850 sq. ft. with extra parking requirements). The bottom line: while the state is pro-ADU, resort towns are proceeding cautiously to ensure ADUs benefit locals rather than just vacationers.

ADU Regulations in Montana

Montana has likewise moved toward ADU-friendly policies. In 2023, the Montana Legislature passed Senate Bill 528, requiring all cities and towns to allow an ADU on the same lot as any single-family home. This statewide mandate (initially challenged in court but upheld by the Montana Supreme Court) essentially legalizes ADUs in every community, big or small. Similar to Colorado’s approach, Montana’s law aims to increase housing supply amid a housing affordability crisis.

Bozeman

Even before SB-528, custom home builders Bozeman, MT recognized the value of ADUs. Since 2020, Bozeman has permitted detached ADUs in all its residential zones (R-S through R-5). The city initially set some limits – for example, ADUs in the lowest-density areas had to keep the main house owner-occupied, and either the ADU or the main house could be rented, but not both simultaneously. Size was limited to 600 sq. ft. and one bedroom. With the new state law, Bozeman will likely remove any remaining owner-occupancy or size restrictions that conflict with the mandate.

Missoula

Missoula has been ADU-friendly as well. Its zoning already allows detached, internal, and addition ADUs on any lot with a single-family house, across all residential and even some commercial districts. The city views ADUs as a way to use existing infrastructure efficiently and offer more housing choices for different income levels and household sizes. Missoula did historically require the homeowner to live on-site for an ADU, but state law now prevents cities from enforcing owner-occupancy, aligning Missoula with the more permissive stance.

Resort Areas in Montana

Smaller Montana communities and resort areas (Whitefish, etc.) are also subject to the state ADU requirement. Many of these areas face worker housing shortages, so ADUs could become a tool to house seasonal employees or provide rental income. At the same time, like Colorado’s ski towns, Montana’s vacation destinations have been wary of short-term rentals.