Accessory Dwelling Units (ADUs)—often called “granny flats,” “backyard cottages,” or “in-law suites”—are compact, self-contained living spaces built on the same property as a primary single-family home, typically between 600 and 1,200 square feet. California has been a nationwide leader in ADU adoption, thanks to state laws in recent years that streamlined approvals and reduced fees. Between 2016 and 2023, annual ADU permits in the state jumped dramatically, with roughly 23,000 units built in 2023—over seven times the number in 2018 en.wikipedia.org+8liccardo.house.gov+8linkedin.com+8. These units serve multiple roles, from housing aging family members to generating rental income, and are uniquely positioned to help alleviate California’s severe housing crunch more quickly and cost-effectively than large-scale multifamily developments.
Recognizing that lack of financing remains a major obstacle—especially for middle- and lower-income homeowners—Rep. Sam Liccardo (D‑CA), alongside Rep. Andrew Garbarino (R‑NY), introduced the bipartisan “SUPPLY Act” (H.R. 4479). This bill would empower the Federal Housing Administration to insure second mortgages for ADU construction and authorize Fannie Mae and Freddie Mac to purchase and securitize those loans . With credit unions and the National Association of Home Builders backing it, the bill aims to transform ADUs from a niche option into a mainstream housing solution. By de-risking lending, it hopes to prompt greater ADU adoption, while simultaneously pushing local governments to further loosen zoning and bureaucratic barriers—in California and beyond—as builders, advocates, and now lenders recognize this as one of the most scalable, low-hanging fruits in the fight against the state’s housing crisis
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