Answers by Katie Curran

An ADU can help resale value, but I would not expect a clean 1:1 return in every market. In practice, value usually depends on whether the unit is legally permitted, permanently attached as real property, well-designed, and something local buyers actually want. Lenders and appraisers do recognize ADUs, but that does not mean every dollar you spend automatically shows up in appraised value. What I usually tell homeowners is this: build an ADU because it gives you multiple benefits — possible rental income, multigenerational living flexibility, guest space, and broader buyer appeal — not because you are guaranteed to get every construction dollar back at resale. The homes that tend to benefit most are the ones where the ADU feels like a true extension of the property instead of an afterthought. If your main goal is resale, I’d look at 3 things before building: local zoning/permitting, total cost versus likely buyer pool in your neighborhood, and whether your lot would lose too much yard/functionality. In some neighborhoods, a beautiful ADU is a plus. In others, buyers may still prefer a larger open yard. So I’d frame it as market-specific, not universal.

You’re not imagining it — the Houston market is more balanced than it was a few years ago, so sellers do have more competition now. But that does not mean homes are not selling. According to HAR’s latest Houston-area updates, active listings are up, days on market are longer than last year, and sales were slightly down year over year, yet pending sales have been rising, which tells me buyers are still active — they’re just more selective. What I’m seeing in Texas generally, and Houston specifically, is this: the homes that are priced right, show well, and hit the market with a strong launch strategy are still moving. The homes that are aspirationally priced or look dated online are sitting longer and having to adjust. HAR’s recent Houston numbers show more inventory and more negotiation room than during the ultra-competitive years, but not a dead market. So if you’d only sell for a strong number, I would not make the decision based on headlines alone. I’d look at your specific neighborhood, price band, and competition. In some Houston-area pockets, sellers still do very well. In others, patience and sharper pricing matter more than they used to. That’s the difference between “buyer’s market” in theory and what your house can actually do in real life.

In Texas, the big thing to know is that Texas does not have a state personal income tax, so there is no separate Texas state capital gains tax on the sale of your home. The tax issue sellers usually need to think about is federal capital gains, and many homeowners qualify for the primary residence exclusion — up to $250,000 of gain if single, or $500,000 if married filing jointly, assuming they meet the IRS ownership and use tests. At closing in Texas, sellers also commonly have to budget for prorated property taxes through the closing date. In many Texas contracts, the seller gives the buyer a credit for the seller’s share of that year’s taxes based on the closing date. That is usually the “tax” item people see on the settlement statement even when no federal capital gains tax is due. For budgeting purposes, I’d separate this into two buckets: Possible federal tax only if you have a taxable gain above the exclusion or special circumstances like depreciation recapture, and Normal seller closing costs, including tax proration, title-related charges, and any negotiated seller-paid items. The exact amount depends on your price point, exemptions, and how long you’ve owned the home, so before listing I’d want a seller net sheet plus CPA input if you think you have a large gain. The IRS also notes that depreciation-related gain can be taxed differently, and some sellers may also face the 3.8% net investment income tax depending on situation.