New California Legislation Aims to Address State’s Housing Crisis

Whether you’ve been tracking home prices on your street or scouring online real estate sites, you most likely know that California home prices keep rising. A recent New York Times article reported that the California Association of Realtors stated the median price for a single-family home in California reached $818,260 in May 2021 with no signs that it will decrease. In fact, in some California markets, median home prices are topping one million dollars. 

The housing crisis is no longer just about those with low incomes. Even middle-income families are finding themselves squeezed out of the housing market as prices continue to climb. To address this concern over the lack of affordable housing options, on September 16th, Governor Gavin Newsom signed into law a number of bills, including Senate Bills (SB) 8, 9, and 10 and Assembly Bill (AB) 1174 along with the recently announced California Comeback Plan. 

Here is a summary of those legislative changes and what they mean:

• SB 8 extends the provisions of the Housing Crisis Act of 2019[2] until 2030 rather than have it end in 2025. This law was enacted to increase housing production through a faster housing project approval process for housing projects.

• SB 9 is the California Housing Opportunity and More Efficiency (HOME) Act. Causing significant controversy, this law allows a property owner to split a single-family lot into two lots as well as build up to two units on each lot. This could mean up to four units on properties that previously only had one property. SB 9 also requires California cities and counties to approve development proposals that meet specific size and design standards in order to expand affordable housing options, protect historic districts, aid fire-prone areas, and improve environmental quality.  However, many believe SB 9 undermines responsible planning for the types of housing needed and ignores the local government review process.  

• SB 10 creates a voluntary process for local governments to use a streamlined zoning process for allowing new multi-unit housing near transit or urban infill areas. The legislation allows for up to 10 units per parcel.  

• AB 1174 amends the existing streamlined, ministerial approval process for housing development in those areas that have not made progress related to allocation of regional housing needs.

Legislation’s Impact

Although there has been considerable debate and concern, no one can deny that this legislation has led to some of the biggest changes in housing in decades. In fact, the single-family zoning ordinance has been in place since 1916.

Here’s what it may mean:

• Property values could change for single-family homes that now may have duplexes and apartments built around them. Some buyers may not like the idea of living next to multifamily residences while existing residents may feel the change ruins their neighborhood. 

• Those of you that have a larger lot may be able to now consider adding income-producing units for additional revenue. 

In terms of its ability to produce more affordable housing units, that result is really reliant on how willing residents with land are willing to add units to their property. Even then, it is estimated that this might only produce a few hundred thousand units when, in actual fact, estimates for affordable housing in California are estimated to be significantly more. The other issue is that simply adding more units would not necessarily result in lower housing or rent costs. 

Now that the new laws are in place, only time will tell what will result from such dramatic changes to housing zoning in California. 

Learn More

If you are interested in buying or selling your property, please contact myself or my team at www.jonesrealtysocal.com or 951-970-4771.