Example of a well-designed Accessory Dwelling Unit promoting sustainable living.
The SUPPLY Act, a bipartisan initiative in the U.S. House of Representatives, seeks to assist homeowners in building Accessory Dwelling Units (ADUs). This act aims to provide financial support through government-backed second mortgages, facilitating affordable housing options for lower and middle-income families. As cities grapple with housing shortages, the SUPPLY Act aims to simplify mortgage processes and promote ADUs as a solution to escalating housing costs, while also highlighting the economic benefits homeowners can gain from such constructions.
A new bipartisan bill known as the Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act has been introduced in the U.S. House of Representatives, aiming to assist homeowners in financing the construction of Accessory Dwelling Units (ADUs). This initiative seeks to benefit lower and middle-income homeowners while tackling the ongoing national housing shortage.
The SUPPLY Act proposes that homeowners would have the opportunity to secure a second mortgage to fund the construction of ADUs, which would have full government backing. Traditionally, financing for ADUs has relied on personal savings or home equity loans, making it challenging for many families to take on such projects. The bill’s introduction is expected to lower these barriers and increase the accessibility of ADU construction.
An Accessory Dwelling Unit is described as a smaller, independent residential unit located on the same property as a single-family home. Generally, ADUs are seen as a practical solution to address the growing housing affordability crisis, with construction costs typically ranging from $100,000 to $300,000. These costs can vary depending on factors such as inspections and permitting fees associated with the building process.
More homeowners are turning to ADUs due to rising housing costs and the limited land available for new traditional homes. As a response to this trend, many cities currently impose restrictions on the construction of ADUs, which the SUPPLY Act does not specifically address. Still, various state programs, including California’s Accessory Dwelling Unit Grant Program, are in place to offer grants—up to $40,000—to assist in funding such projects.
One notable example of an ADU owner is a resident of Oakland, California, who constructed a 560-square-foot unit in her backyard, motivated by difficulties encountered in her two-story home. This resident financed the construction for approximately $350,000. With the increase in property prices in the area—where the median home sale price was $751,455 as of October—homeowners with ADUs have generally seen substantial appreciations in their property values.
An analysis revealed that houses with ADUs in California boast a median appraised value of $1,064,000, compared to $715,000 for properties without such units. This significant value appreciation makes the construction of ADUs an attractive investment for homeowners. Current Google search trends indicate a rising interest in options like “granny pods,” compact dwellings for aging family members, showcasing the societal shift towards multi-generational living solutions.
In addition to state programs, local initiatives like Oakland’s Keys to Equity program focus on assisting Black and low-income households eager to build or legalize ADUs. As the popularity of ADUs continues to surge, they accounted for 8% of building permits in California in 2018, a figure that rose to 18% by 2022, according to reports from the Urban Institute. This growth reflects a broader trend as homeowners seek to create flexible living arrangements.
The SUPPLY Act represents a hopeful step towards addressing the national housing shortage, particularly for lower and middle-income homeowners. As communities increasingly recognize the value of ADUs, the potential for enhanced property values and improved living situations for families remains promising. With the backing of federal support through the proposed legislation, more homeowners may soon find it viable to build these units and contribute to alleviating housing challenges across the nation.
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