Congress is on the verge of enacting the most sweeping federal housing legislation in decades, and while the change won’t come with fireworks or a splashy signing ceremony, its ripple effects could eventually be felt across California’s notoriously expensive housing markets.
The bill is set to become law automatically just after midnight Saturday, thanks to a quirk of the Constitution rather than a presidential signature. President Trump had pledged not to sign the housing measure until Congress first passed a national voter identification proposal — legislation that has stalled in the Senate. With that impasse continuing and Trump reiterating his refusal to sign as recently as last week, the housing bill will take effect without his approval, simply by running out the ten-day clock the Constitution allows for presidential action.
Despite the anticlimactic path to passage, housing advocates say the substance of the bill is anything but minor. Rather than one bold stroke, the legislation bundles together 56 separate provisions — regulatory tweaks, pilot programs, low-cost loans and grants — aimed at chipping away at the nation’s housing affordability crisis from multiple angles. No single piece is likely to transform the market on its own. Supporters are betting that, together, they might.
“We don’t often get together to celebrate federal housing legislation,” Stephen Russell, president of the Housing Federation of San Diego, said at a press conference last week. “I think the last time Congress passed something of this magnitude, a lot of you weren’t even born yet… this is close to a once-in-a-lifetime event.”
The bill’s momentum reflects a growing bloc of lawmakers aligned with the “Yes In My Backyard” movement, many of them from California, a state that knows a thing or two about sky-high housing costs. But the push to link affordability to housing supply has become a bipartisan cause nationally. Tellingly, the legislation was born out of a partnership between Republican Sen. Tim Scott of South Carolina and Democratic Sen. Elizabeth Warren of Massachusetts, one of the Senate’s most progressive members.
Though none of the bill’s provisions target California specifically, several stand out for the mark they could leave on the state.
BUILD NOW, OR ELSE
For expensive cities that have chronically underbuilt — a description that fits much of urban California — the bill pairs incentives with real consequences.
The legislation reworks the Community Development Block Grant program, one of the federal government’s primary funding streams for affordable housing and local economic development. Cities with high housing costs, measured through price and vacancy data, that have a history of sluggish construction and continue to build below-average levels of housing will see their block grant funding cut by 10 percent. Those savings will be redirected to cities building at a faster clip.
That could carry “real implications for cities like Los Angeles and San Francisco, which have traditionally lagged” in expanding housing supply, said David Garcia, deputy director of policy at UC Berkeley’s Terner Center for Housing Innovation.
According to U.S. Department of Housing and Urban Development data, the city of Los Angeles received $48.4 million in its most recent block grant allocation in 2024. San Francisco received $18.9 million. Those figures alone wouldn’t make or break either city’s budget.
“I think this will be a small nudge,” said Laura Foote, executive director of YIMBY Action, in an email. “Which, applied nationally, could have a big impact! Small nudges add up.”
Beyond the dollar amounts, the precedent may matter more. Even in California, where the state has aggressively pushed cities to plan for more housing and penalized those that don’t, lawmakers have never before punished municipalities for failing to actually build — an outcome not always within a city’s control.
Garcia called the idea “inconceivable in past Congresses.” Even so, the provision hasn’t drawn much public pushback from local government groups. In an online summary, National League of Cities lobbyist Michael Wallace praised the broader housing bill as an example of the federal government “choosing collaboration with local governments over the imposition of laws,” highlighting other provisions that give cities more flexibility in spending block grant funds and new incentive programs to boost supply.
LOSING THE CHASSIS
Manufactured homes are often casually called “mobile homes,” but in practice, they rarely move. Built on assembly lines and trucked to their final destination, these naturally affordable homes — the type policymakers across California and the country say the market desperately needs more of — are typically installed on permanent foundations. Fewer than 10 percent are ever relocated again.
Yet the federal building code governing manufactured homes still requires a costly holdover from their mobile origins: a permanent steel chassis.
That chassis — a massive steel undercarriage complete with removable axles and wheels — is technically there to make transport easier. In practice, it functions as a bulky, 10-to-12-inch-thick floor that can’t be removed once the home is delivered. It adds thousands of dollars to the cost of each unit and makes it far more difficult to stack manufactured homes into two-story buildings or multifamily apartment complexes, according to Jess Maxcy, president of the California Manufactured Housing Institute.
The new federal law eliminates the permanent chassis requirement — a change manufacturers and housing policy experts have pushed for since the mid-1980s.
“That relatively small change will expand access to one of the most affordable paths to homeownership,” said Rep. Scott Peters, D-San Diego, at last week’s press conference.
Maxcy said she doesn’t expect the rule change to spark an overnight boom in manufactured housing. But especially in California, where high land costs make it more likely that new single-family homes will be built stacked on small lots, the change “gives us more opportunities and helps us bring the price down.”
DISASTER RECOVERY, MADE PERMANENT
In the months after a natural disaster, long after emergency federal funds run dry, Congress has historically stepped in with long-term rebuilding grants through the Community Development Block Grant-Disaster Recovery program. Over the past three decades, the program has funneled more than $100 billion into long-term recovery work — building housing, repairing infrastructure, and helping with rental and relocation assistance. The money is typically reserved for low-income residents and communities “that won’t be able to recover without these funds,” said Marion McFadden, who ran the program under the Biden administration and now works at IEM, a disaster preparedness and recovery consulting firm.
Unfortunately for California, the program has never had a permanent, guaranteed existence. Since the mid-1990s, it’s been authorized and funded on an ad hoc basis, tucked into individual spending bills. That makes it difficult for communities trying to plan long-term recovery, and it means the rules governing the money — who gets it, when, under what conditions and for what purposes — get rewritten with every new administration, often slowing the process considerably. According to the Carnegie Endowment for International Peace, Los Angeles has yet to receive any disaster recovery block grant funding following the 2025 wildfires. Congress has not yet appropriated any.
The new housing bill would permanently authorize the program in law for at least three years.
“This allows HUD to have funds ready before a disaster and make a decision within 15 days on whether it will provide funding,” McFadden said.
What the bill doesn’t do: provide additional funding. Disaster-prone communities will still have to wait for Congress to address that separately.
CLEARING A BOTTLENECK
For the past two decades, public housing authorities in Los Angeles and the Bay Area have relied on the federal Rental Assistance Demonstration program to repair and modernize their aging public housing stock. The program works by diversifying funding sources, giving local agencies more flexibility to secure loans and attract private investment.
Until just after midnight on July 11, the federal government was only authorized to approve 455,000 of these conversions nationwide. The new bill raises that cap by another 100,000 units.
“This has been a bottleneck in California for years, and that bottleneck has just been removed,” Russell said.
Not every affordable housing advocate is celebrating. The National Low Income Housing Coalition has consistently opposed expanding the program, arguing that shifting funding sources could weaken existing tenant protections. It’s unclear how much truth there is to that concern — a study last year found no evidence that conversions under the program lead to increased evictions.
KEEPING WALL STREET OUT OF THE SUBURBS
If there’s one thing most people have heard about this bill, it’s that it bars “large institutional investors” from buying up more single-family homes.
The final version includes some significant caveats. The bill defines “large” as any corporate entity controlling more than 350 single-family homes. It’s not retroactive, so investors who already hold large portfolios don’t have to sell them off. There are exemptions for new construction, renovations and senior housing. In California specifically, where corporations and other large investors don’t play an outsized role in the housing market, the impact is likely to be modest.
The provision “takes an issue that resonates deeply with people across the country and applies a fairly modest fix,” said Chad Maisel, a fellow at the left-leaning Center for American Progress and a former housing policy adviser to President Biden.
Still, the measure enjoys broad bipartisan support. Earlier this year, Trump called for even tougher restrictions on so-called corporate landlords. Gov. Gavin Newsom made a similar call that same week.
The anti-investor language in the final bill was softened considerably from an earlier version that threatened to undercut “build-to-rent” developments — well-financed subdivisions of single-family homes built specifically for renters. That earlier draft sparked backlash from developers and YIMBY advocates who otherwise strongly supported the bill, arguing that such communities are among the fastest-growing sources of new housing in the country and offer renters rare access to suburban-style, single-family living.
After that provision was stripped from the federal bill, state Sen. Aisha Wahab, D-Fremont, now a congressional candidate, introduced state legislation reviving the idea. Her bill, SB 880, would have barred the bulk sale of multiple single-family homes, striking directly at the build-to-rent business model. That measure was rejected by the Assembly Judiciary Committee in late June.
Original source: CalMatters
