A recent "The Urbanist Agenda" pod cast related to this a bit in that they were talking about zoning laws in Japan vs US and how in Japan the rules and economics create a wider variety of housing sized and price points within a neighborhood that enables people to downsize (or upsize) but remain in the same neighborhood. And all the societal benefits this can have.
In CA, a bill has recently been enacted that allows the addition of a detached Accessory Dwelling Unit (ADU), and an attached ADU, which means it's under the same roof as the primary dwelling. Cities are required to streamline the permit process and there are limits on what the utility companies can charge to make the process more affordable. My city has even come up with pre-approved Floorplans. Many NIMBYs think the sky is falling.
We recently spent a week visiting friends who live in an older neighborhood in a different part of CA. While we were there, we took many opportunities to "cruise the neighborhood." Many of the homes seemed to have some kind of ADU. We got to meet and chat with a neighbor, who raved about what a benefit it is to the entire neighborhood. We thought the whole area was adorable and extremely liveable.
Another friend lives in a small SFH development. The houses have tiny lots with Zero Lot Lines. They have the typical narrow streets with curbs but no sidewalks, designated visitor parking spots, no on-street parking, a community pool, and and the ubiquitous HOA. Recently, the president of the HOA built an ADU in their front yard.** The neighbors were surprised, then outraged. DH and I were impressed with how cleverly it had been integrated into the original house. In a few years, no one will even notice it, just like the neighborhood described above.
Which reminds me of a favorite book title. "Change is Hard, You Go First."* Perhaps other states will follow, much as CA is emulating the examples of other countries such as Japan.
The conclusion is that CA merely codified what was already happening organically. The sky is not falling, the world will not end, and more people will be able to find housing.
*I'm aware there's another book with a similar name, it's not a typo.
**To keep this kind of on track,he built it, at obviously great expense, for one of his children.