A recent analysis by the Public Policy Institute of California (PPIC) revealed that the state added 677,000 housing units over the past six years, even as its population grew by only 39,000. Despite this increase in housing, the market remains tight. Owner vacancy rates dropped from 1.2% to 0.8%, while rental vacancies stood at just 4.3% in 2024, well below the national average of 5.9%.

“The state has made some headway in adding housing units, but it’s been playing catch-up for so long that the progress hasn’t been enough to significantly ease the market,” said Joel Berner, senior economist at Realtor.com.

California’s housing shortage remains a major issue, with the state needing an estimated 2.5 million more homes, according to a 2022 estimate by the state’s housing agency. PPIC’s report also highlights a demographic shift that’s influencing the market, as household sizes have decreased over time. Between 2019 and 2024, the state lost 82,000 households with children and gained 722,000 households without them.

“Fewer people in each household means we need more households overall,” Berner explained.

The aging population of California is also contributing to this trend, with 16.5% of the state’s population now 65 or older, a figure projected to rise to 24.9% by 2050.

In response, homebuilding has picked up, with accessory dwelling units (ADUs) becoming more common. ADUs are secondary living units on the same property as a primary home, and California has encouraged their construction through policy changes aimed at reducing local restrictions.

“The state has made notable progress in encouraging ADU construction, which should be recognized,” Berner said. “These units are playing an important role in addressing the housing shortage where it’s most needed.”

While these efforts show progress, they haven’t fully addressed the crisis. New homes continue to be quickly absorbed, and vacancy rates remain low. Berner pointed out that despite California housing 11.5% of the U.S. population, the state only accounted for 7.3% of newly permitted housing units last year. “The pace is still not fast enough,” he said.

PPIC’s analysis also noted that household formation among young adults has risen, suggesting more younger residents are starting their own households. However, the state will need more affordable housing to allow these residents to take that next step.

Of the 1.2 million housing units planned for California, only 712,000 are designated for moderate-income or lower households, which is about half of what is necessary to meet demand, according to Realtor.com. This gap could pose a significant challenge moving forward.

The post California Housing Market Faces Slow Progress Despite Increased Inventory appeared first on The Hemet & San Jacinto Chronicle.

Cash out. Leave the Golden State for somewhere more affordable, less crowded and probably less cool. Sure, you lose the beaches, hiking, cuisine and culture. On the other hand, you gain cheaper living, the chance to save money and make your paycheck — or 401(k) — go further.

Decades of rising costs have prompted many to make this choice. But does it really pay off the way they expect?

New data from UC Berkeley strongly suggest that for people who moved out of the Golden State, taking part in the California exodus can bring dramatically improved financial conditions.

The researchers studied the finances of people who left California over the last decade to see how well they did in their new communities. The California Policy Lab research covered people who left or arrived in California from 2016 to 2025 — millions in total. They generally left for nearby states such as Nevada and Arizona but also for hot locales such as Texas and Florida.

Among the findings:

• People who left the state found that the move saved them almost $700 in monthly housing costs.
• They became 48% more likely to own a home in their new state compared with California, where housing prices are notoriously high.

Although the research covered all types of people who left the state, the differences were most notable for those who were struggling with affordability in California.

One surprise from the California Policy Lab’s findings: Those leaving the state are increasingly moving out of its wealthiest areas. The share of Californians departing the state from its top-third median-income areas rose by 6.4 percentage points between 2016 and 2025, while the shares from low- and middle-income neighborhoods dropped.

In other words, the pandemic caused a major shift in the type of person who leaves California, with residents of higher-income areas growing.

“The average exiter now leaves from a neighborhood that is 8.7% more affluent than in the pre-pandemic period,” the report stated.

Evan White, a California Policy Lab co-founder and author of the report, said he wasn’t exactly sure what caused the trend. But he noted that tech workers in upscale Bay Area districts who can work remotely might find more affordability elsewhere. Another possibility is that lower-income residents “can’t keep up with the Joneses and aren’t able to attain the type of lifestyle they want to have,” causing them to look elsewhere, he said.

The price of a basket of typical goods and services in California from 2016 to 2025 is up about 38%, according to the California Department of Industrial Relations. Median home sale prices went up around 75% over the same span, per the state Employment Development Department.

Indeed, the data suggest that those leaving California are in significantly worse financial shape than their neighbors who stay. Those who left had $5,500 more (twice as much) student debt on average than their neighbors and 16% higher rates of credit card utilization.

The data, compiled over 10 years, are an indication of the affordability gap across California.

But it is far from a full demographic snapshot. Some of those who left California have returned, saying they missed the lifestyle and nature. California has bounced back from the pandemic, with populations rising again in big cities. Even some critics have noticed a new boom in San Francisco, hit hard by COVID-19 but now enjoying a rebound thanks to the artificial intelligence gold rush.

While the entertainment industry has seen significant retraction in Southern California, the tech sector in Northern California has generally remained strong.

Dowell Myers, a professor of policy, planning and demography at USC who was not involved in the research, said the Berkeley data reinforce the affordability challenges California faces, especially when it comes to housing.

The nearly $700 a month in lower housing costs is less than adequate compensation for those who leave the state, he argued, adding that many people leave because they have no other choice.

“It’s a really sad story,” he said.

As for young professionals who come to work in the Golden State, “we can’t hold them, that’s the lesson,” he said. “They come for opportunities, but housing is really key.”

The chart above shows the average monthly housing expenses for three separate groups between 2016 and 2025: those who moved from other states to California, those who moved within the Golden State, and those who left California for other states.

Before leaving California, those who left paid on average $2,376 in monthly housing costs. After relocating to another state, former Californians spent just $1,705 per month, a drop of $671. Those who moved from other states to California saw the opposite effect, with costs rising a similar amount.

“Pretty much anywhere else is more affordable than California,” said White, the author of the report. “People were going to dramatically less expensive locations.

“Once we learned that,” he said, “it didn’t surprise me that they then became homeowners at higher rates.” What was surprising, however, was the magnitude of the change, White said.

White said he undertook the research to contextualize the shift in population over the last few years “because people care what’s happening with their friends and neighbors,” he said. “They don’t want to be the last one at the party” as others leave.

Still, the state’s outlook remains bright, White said. California continues to mint millionaires, “so there are good reasons to stay and good reasons to come here” besides the obvious attractions such as lifestyle and weather, he said.

White, who was born in Altadena, now calls the Bay Area home. He’s a homeowner, but if he weren’t, he might consider leaving the Golden State because of high costs: “Sure, I could see that influencing me.”

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What the project lacks is money. 

Having quilted together a financial patchwork of local government and corporate grants, private debt, and a plot of land donated by a foundation, it remains just shy of the total needed to break ground. 

Six years and 13 funding applications after it was first proposed, the Morris Village project sits ready, but waiting.

An estimated 39,880 affordable units across California are stuck in financial purgatory, according to a new report by Enterprise Community Partners, a national nonprofit that funds, consults and advocates for affordable housing. That’s 461 “shovel-ready developments” that, like the one on East Morris, are fully designed, legally green-lit and backed with a significant — but still insufficient — amount of money.

Many have “been sitting for a year or two waiting for funding,” said Justine Marcus, policy director for Enterprise’s Northern California office and one of the report’s co-authors. “There’s no exit route right now. It’s a bottleneck.”

For many developers and affordable housing advocates, that bottleneck represents an especially frustrating inconsistency of California public policy. Lawmakers are desperate to see the state build more homes — of all kinds, but especially for people with the least ability to pay the state’s exorbitant rents. State housing regulators have ordered local governments to plan for the construction of an additional 2.5 million units by the end of the decade. One million of those are supposed to be for people making less than 80% of each region’s median income. 

As a general rule, that’s a population of hard-up renters that the private market has been unable to profitably serve at scale. To fill that gap, non-profit low-income housing developers typically turn to taxpayer-funded support. At the moment, according to the report, there isn’t enough of that to go around.

Enterprise took publicly available but hard-to-parse applicant lists from seven subsidy programs administered by various wings of California’s state government going back three years. With a combination of number crunching and a little inference, the report estimates that clearing the current backlog would require an extra $4.1 billion, split between state administered grants, low-cost loans and tax write-offs.

Once awarded, this final layer of state subsidy has to be spent in relatively short order. That means this list of 39,880 units comprise a group of affordable housing projects that are all but ready to go, said Marcus. “They kinda have to have their (stuff) together.”  

Case in point: Two-thirds of the projects on the list have already received support from at least one other state program. Those dollars aren’t awarded to just any developer, said Betsy McGovern-Garcia, vice president of Self-Help Enterprises, one of two non-profits behind Morris Village.

“These are all projects that are close to amenities,” she said. “These are all projects providing resident services. These are all projects that are financially feasible…They are all meeting the bar for what we want to see as a state out of our affordable housing community.”

In February, McGovern-Garcia and her colleagues applied for a final round of financial support from the state “to close the gap” and finally start construction.

“We are optimistic this might be our round,” she said in an interview, her fingers crossed. 

A moving bottleneck

California has seen gridlock in affordable housing production before, but the precise location of the traffic jam has changed over time. 

When Nevada Merriman was leading a team of affordable developers in Silicon Valley a decade ago, she said local approval was the major hold-up. Getting the legal okay to build low-income housing on a particular site in a particular town required developers to run a gauntlet of planning department and city council meetings, win over hostile neighbors with costly concessions, community meetings and design revisions and to fend off the ever-present possibility of litigation. Because relatively few projects survived that ordeal, the competition for funding on the other side wasn’t especially stiff, said Merriman, who is now policy advocate for MidPen Housing, an affordable developer in San Mateo County. 

That began to change earlier this decade. California lawmakers began passing laws overriding these local impediments — especially for affordable projects. All of a sudden more projects were clearing those early regulatory hurdles and competing for Low-Income Housing Tax Credits, the federal government’s signature affordable housing construction subsidy. The bottleneck moved further up the road.  

But then that too began to change late last year. Buried in President Donald Trump’s signature tax bill from 2025 was a significant boost to the tax credit program. (Specifically, the law increased the total supply of one type of credit while allowing another kind to be spread out over twice as many projects).

Which brings us to the latest bottleneck. 

Now projects can get through local approval. They can more easily acquire the final and most important layer of federal financing. But project sponsors typically can’t apply for that until all other financial holes are plugged. 

“We’re looking for state sources to fill that gap,” said Merriman. “We want to make sure we don’t leave those federal sources on the table.”

MidPen currently has 1,198 units spread across seven developments waiting for that last bit of funding, she said. “Should there be a source…there’s a pipeline that is ready to go.” 

California’s last major infusion of public affordable housing dollars came in the form of a voter-approved bond in 2018. That well has run dry. A hodgepodge of funding streams remain.

Adding together funding that has already been approved by legislators but not yet spent and a variety of other state and federal sources, California’s Housing and Community Development department says at least $1.8 billion should be available for affordable developer applicants this year. Gov. Gavin Newsom’s budget proposal for the coming fiscal year doesn’t include any new discretionary spending beyond that.

Boosters of more funding have reasons to be optimistic. Newsom has taken such an austere posture in early budget negotiations before only to have the Legislature successfully pour hundreds of millions of dollars of affordable housing subsidies back into the final budget agreement.

California lawmakers are also considering a record-breaking $10 billion affordable housing bond for the 2026 ballot. If a majority of voters go for that, “we’d be off to the races,” said Merriman. 

Cutting costs

One way to get more affordable housing built is by spending more money. The other is trying to make the existing money go further by cutting costs. 

The cost of affordable housing construction is notoriously high in California: A 2025 study estimated that tax credit-financed projects here cost two- to four-times the amount of comparable projects in Colorado and Texas. There is no single reason for this disparity. Land costs in California are significantly higher. So too, often, is the cost of labor. Regulatory barriers like restrictive zoning, slow permitting and stiff impact fees are frequently named as culprits. Sometimes old-fashioned construction methods and materials get blamed.

But there’s also the cost of just waiting around.

A typical affordable development in California will have two or three public funding sources, with some drawing on six or more. Many of these sources are awarded on their own timelines. Each has its own program-specific requirements that can take time to meet. Some are conditional on the receipt of another. As time goes by, developers still have to make payroll, pay interest on pre-construction loans and watch as inflation drives construction costs up further. As delays compound, funding sources that have already been secured might expire, setting things back further. 

Each additional funding source delays the start of construction on a project by an average of four months, adding an extra $20,460 per unit, according to an analysis by the Terner Center for Housing Innovation at UC Berkeley.

The Newsom administration is currently tinkering under the hood of California’s affordable housing finance system in an effort to speed things up.

Last year, the governor proposed the creation of the state’s first ever cabinet-level housing agency. The California Housing and Homelessness Agency is scheduled to take over the state’s disparate housing loan and grant programs. The governor’s office also proposed legislative language that would force the new agency and the Treasurer’s Office to operate in tandem, giving affordable housing developers a single place to apply for the state’s various funding programs — and to cut out some of the time they spend stuck in line.

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There’s a grown-up version of that conversation as well. For the first time in nearly four years, mortgage rates have dropped below 6%. But just how many Americans have home-buying money right now?

Half of us struggle to pay our monthly mortgage or rent, according to a recent survey. More than 80% of prospective buyers said last year that difficulty coming up with a down payment plus closing costs was holding them back.

For folks who can buy a home, the falling mortgage rates are great news: Even just one percentage point can represent tens of thousands of dollars over the life of a mortgage.

However, when nearly a quarter of Americans report living paycheck to paycheck, the recent mortgage rate news only highlights the growing disconnect between America’s economy and its people. It’s like hearing the Dow Jones industrial average has crossed the 50,000-point threshold when the wealthiest 10% of Americans own more than 90% of the stock and nearly half of all private-sector workers don’t have access to an employer-sponsored retirement plan.

Democrats are right to point out the shortcomings of President Trump’s economic policies. But what are the policies they are pushing to address the expanding chasm between the haves and the have-nots? Campaigning on the principles of democracy — free speech, peaceful transfer of power, due process — is a response to what Republicans are doing wrong. But those aren’t the issues that motivated voters and brought Trump back to power.

Trump won his second election in part because he sold a vision of wealth — and the promise of wealth acquisition is also part of the American dream. George Washington, John Hancock, Thomas Jefferson … the founding fathers were among the richest men in the colonies. Yes, the American Revolution was a fight for sovereignty. And that was not all philosophical. The American dream was always a material one, with wealth and ownership as centerpieces.

Modern progressives, especially elected officials in office, do not like to talk about money in that way, but the reality is that protecting democracy requires more than upholding the Constitution. It includes making sure people feel as if democracy is working for them. People will assess that in part by whether it’s hard to get by and whether it’s imaginable to get ahead.

That’s one of the reasons the Biden administration sounded so out of touch when it came to the economy in 2024. Far too often, the pain that the have-nots were experiencing during his time in office would be met with metrics that mostly benefited the haves. Same economy, different impact. Case in point: While grocery prices had soared for four years and inflation-adjusted wages were flat, corporations pulled in a record $4 trillion in profit just in the last quarter of 2024. CNN noted that the top five U.S.-based oil and gas companies pulled in profit of more than $250 billion during the first three years of the Biden administration, an increase of 160% compared with the same period of the first Trump administration.

The U.S. economy was breaking records while simultaneously breaking hearts.

Although Trump campaigned on that disconnect, since returning to the White House his policies have only served to exacerbate the issue. So far more than 90% of the tariffs he imposed have been paid for by U.S. consumers and U.S. businesses. We have rising healthcare costs. Trump’s first year back in office was the worst for job growth in a nonrecession year since 2003.

Trump certainly has a lot to answer for, and his response to Americans’ economic pain has been almost word for word the same as President Biden’s.

All of this means that Democrats have plenty to blame on Republicans during the midterm election campaigning this year. However, from a messaging perspective, Democrats have not wowed anyone with an alternative platform — thus the party’s historically low approval rating. Party leaders continue to talk about the fight for democracy, sounding like law professors consumed by theory. Rallying around key economic policy proposals that will help the work force bring home a bigger paycheck is equally important and demands more of the party’s time.

Trump’s critics need to stay on message regarding his attacks on democracy, and sure voters would like to be choosing candidates based on good governance. But when you can’t save money or see a way to buy a house before turning 40, “good governance” becomes a distant second to having money in your pocket.

The message that will resonate most is the one that makes voters feel that in America, you can still have both.

The post There are two Americas. Falling mortgage rates matter only to the wealthy one appeared first on The Hemet & San Jacinto Chronicle.

Now signed into law and taking effect Jan. 1, it takes aim at an issue that is much less prevalent on the streets of California. It says cities cannot punish outreach workers for helping homeless clients, even if those clients are sleeping in an illegal encampment. 

More precisely, the law says cities cannot bar people or organizations from providing homeless residents with legal services, medical care or things needed for survival, such as food, water, blankets, pillows and materials to protect themselves from the elements. 

“The legislation provides commonsense protections for service providers, especially non-profits and faith-based ones, who are doing the work every day to assist unhoused Californians,” Pérez said in an October statement. 

San Bernardino County, on the other hand, said the law will “override local authority and restrict enforcement tools that cities and counties use to promote public safety.”

It’s not unheard of for aid workers to find themselves caught in the crosshairs of a city’s crackdown on homeless encampments. The Bay Area city of Fremont earlier this year briefly made “aiding, abetting or concealing” an illegal homeless encampment a misdemeanor. Its city council later walked back that language — after CalMatters first reported it — but it made a lasting impression on state legislators. 

The legislation follows a statewide push toward the increased policing of homeless Californians. In 2024, the U.S. Supreme Court gave cities more power to cite and arrest people for sleeping outside, even if they have no shelter available. Since then, arrests and citations for homelessness-related offenses have soared in cities across the state.

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The Inland Region Housing Justice Coalition — which includes Time for Change Foundation, IE Tenants Union, Victor Valley Family Resource Center, ACLU of Southern California, Congregations Organized for Prophetic Engagement (COPE), Inland Equity Community Land Trust, Inland Congregations United for Change (ICUC), and Interfaith Movement for Human Integrity — opposed the measure and urged investments in housing and services.

“The number of encampments on county public property has increased over recent years,” said Board of Supervisors Chairman and Third District Supervisor Dawn Rowe. “These conditions threaten not only those living within the encampments, but also the broader community. The goal of this ordinance is to address critical health and safety risks, while also ensuring that people experiencing homelessness have access to the care and support they need.”

The County said the ordinance aligns with a July 2024 executive order by Gov. Gavin Newsom encouraging local governments to adopt policies to address homeless encampments and to humanely remove encampments. Following adoption, officials said they will prioritize flood channels and other areas that expose inhabitants to critical health and safety dangers, and will connect individuals to housing and supportive services while continuing outreach.

“Passing this ordinance is an important step in our proactive approach to addressing homeless encampments,” said Rowe. “It also ensures that people experiencing homelessness have access to the appropriate supportive services.”

Coalition leaders said the ordinance targets people experiencing homelessness without solving the region’s underlying shortages of housing and care. “The ordinance fails to address the real crisis. Our region’s lack of affordable housing and supportive services,” said the Inland Region Housing Justice Coalition in a joint statement. “Criminalizing homelessness only deepens poverty and makes it harder for people to get back on their feet.”

“We need investment in housing, not handcuffs,” said Raynesha Belvins, Homelessness Survivor and Advocate of Time for Change Foundation.

“This ordinance may have passed, but our community is united in demanding dignity and solutions,” added the coalition. “We will continue to push for policies that reflect compassion, equity, and justice,” said Sharon Green – CEO of Victor Valley Family Resource Center.

During the public hearing, coalition representatives urged county leaders to prioritize permanent supportive housing, rental protections, addiction treatment, mental health care, and wraparound support. They emphasized that enforcement-targeted policies are harmful and costly to taxpayers, while housing-first models save money and lives.

The post San Bernardino County Bans Homeless Encampments; Housing Coalition and Time for Change Push Back appeared first on The Hemet & San Jacinto Chronicle.

In RentCafe’s 2025 Apartment Construction Report, the Los Angeles metro area is the state’s top builder and the 11th nationwide, with 12,558 units in the pipeline, one-third of which (4,177 units) are in the city of Los Angeles.

While California is the most populous state, and about 44% of Californians rent, one of the highest figures in the U.S., apartment construction in the Golden State accounts for just 8% of the estimated 506,353 units expected nationwide by the end of the year. 

While the total is lower than last year, it is still higher than the annual totals recorded each year since 2015, according to the study.

Inland Empire, San Diego hotspots for new apartment builds

The Riverside metro area, including the cities of Riverside and San Bernardino, more than doubled its new units this year, bringing the total to 6,096 units, making it the region with the second biggest building activity in California for 2025. 

There are approximately 40,500 apartment units expected to come online by the end of the year in California, according to the study.

In the San Diego metro area, 4,690 apartment units are anticipated by the end of 2025, while Sacramento ranks 5th with 2,281 new apartments.

The Fresno metro area, including the cities of Hanford and Corcoran in the San Joaquin Valley experienced a significant uptick of 43.1% in new apartments, totalling 1,188.

Overall, the study found, the Central Valley is expected to open 2,828 units this year.

Apartments for rent in San Francisco Bay Area a mixed bag

While the study shows the San Francisco Bay area is set to complete 4,175 apartments in 2025, it follows a 51% decrease in construction compared to last year.

Of the expected units, 1,331 are located in the city of San Francisco.

Along a similar vein, San Jose saw 47.8% fewer rental completions compared to 2024, finishing the year with 2,757 new units.

According to ApartmentList, the connection between “supply growth and rent growth” is clear: “markets that build more apartments see fewer rent increases.”

Rents in the San Francisco Bay Area are the fastest-growing in the U.S., increasing by 4.6% across the metro area and 10.6% in the city of San Francisco, while rents in Dallas, Texas, which is experiencing a building boom, are down 1.4% year-over-year.

The remaining approximately 1,800 units are set to be completed on the Central Coast. 

The post Looking to move? These are California’s hottest rental markets appeared first on The Hemet & San Jacinto Chronicle.

It comes from an unlikely source.

Buried deep among the cuts to social services in President Donald Trump’s signature spending package, the One Big Beautiful Bill, is an increase in support for the Low-Income Housing Tax Credit that affordable housing advocates have sought for years. Those tax credits are the most important federal funding available for affordable housing, and they’re used in low-income projects throughout California. 

Exactly how much difference this boost will make in the Golden State depends on many factors, including tariffs, labor costs, state funding, and more. But experts agree the change could help California build thousands more affordable homes each year. 

“It’s a very big deal,” said Matt Schwartz, president and CEO of the affordable housing nonprofit California Housing Partnership. “These provisions are a huge shot in the arm for an affordable housing field that has been suffering under exhausted state resources.”

It’s no wonder those provisions haven’t gotten much public attention. The federal law, which Trump signed on July 4, extends and expands tax cuts that disproportionately benefit the richest and adds trillions to the federal debt while imposing historic spending cuts to Medicaid, other patches of the social safety net and clean energy programs over the next decade. For California’s Democratic leadership and its liberal-leaning electorate, there isn’t much to love and plenty to hate.

“From a California perspective, there have certainly been a lot of concerns with that bill,” said Ray Pearl, executive director of the California Housing Consortium, which advocates for affordable housing development. 

But the spending package gives affordable housing boosters something to celebrate, even if many in blue California are reluctant to do so publicly. 

Because the expansion to the tax credit program, part of a preexisting bill, was folded into the broader package, “the federal government has given us a green light to double production,” said Pearl. 

Last week, the state committee that oversees these credits approved changes to its application process that incentivize developers to take advantage of the new federal policy.

What exactly do tax credits have to do with affordable housing? 

Rather than fund public housing construction directly like it used to, the federal government rerouted most of its affordable housing funds through the tax code beginning in the 1980s. These tax credits are issued by states to affordable developers, who then sell them on to deep-pocketed banks, insurance companies and other financial behemoths, trading tax cuts for ownership shares in affordable housing projects.  

It’s a financial Rube Goldberg machine, and it’s everywhere. If there’s an apartment project designated for unhoused people or low-income tenants in your neighborhood, chances are tax credits helped get it off the ground. 

The credits come in two basic flavors. Both are getting a major boost under the new federal law.

One credit lets its owners write roughly 9% of the cost of construction on a project off their tax bill each year for 10 years. Those 9% credits are doled out by the federal government to the states, who then turn around and award them to developers. There are always more qualifying projects than there are credits to fund them, especially in California. The Trump-backed spending package boosts the total number of these credits by 12% each year indefinitely. 

The other type of credit, the 4% credit, doesn’t come with a cap, which means it is technically available to any developer who qualifies. How a developer qualifies is the rub. Historically, an affordable project needs to cover half of its costs with particular tax-exempt bonds — which, like the 9% credits, are in short supply — to make full use of the 4% credits. The federal bill reduces that requirement, so that a project only needs to cover a quarter of its cost with the bonds. 

“The bottom line is the federal government is making additional tax credits and bond capacity available,” Pearl said, “which is one of the biggest things you need to produce affordable housing nationwide, and especially in California.”

The state receives more requests for bond financing each year than it can grant, said Marina Wiant, executive director of the California Tax Credit Allocation Committee. Her committee last week voted to change its application to line up with the new federal requirements — reducing the percentage of a new project that must be financed via bonds, and allowing projects already approved to reduce their bond financing. That lower threshold means there will be more bond money to go around, and more projects will get funded, she said. 

“There are a lot of projects still in the queue that are waiting for bond financing,” Wiant said. “So this immediate change will have a pretty immediate impact this fall.”

How did this affordable housing boost get into Trump’s spending plan in the first place?

Schwartz’s group and others have been fighting for this tax credit increase for years, garnering bipartisan support along the way, he said. Republican lawmakers tend to view tax credits as a “good kind of subsidy,” he said. Because they are used by corporations, they are more palatable than food stamps and other direct assistance that are viewed as handouts.

Just how much could these new tax credits help? That depends on who you ask. 

The changes in policy could fund the construction of an extra 1.22 million affordable rental units nationwide over the next 10 years, according to an estimate by the accounting firm Novogradac. That works out to roughly 20,000 extra units per year in California.

But many things could get in the way. If the cost of building goes up because of tariffs, increased labor costs or interest rate hikes, developers might decide not to use the tax credits. Trump’s spending package also keeps corporate tax rates low, which could reduce the value of the housing tax credits.

And, because housing is so expensive to build in California, most projects can’t rely solely on tax credits — they need other local and state funding, too. But that funding is in short supply. Extra money given out during the COVID-19 pandemic has dried up. A regional $20 billion affordable housing bond was set to go before Bay Area voters last year, but it was pulled off the ballot amid fears it would fail. 

As a result, Schwartz estimates California will see closer to 10,000 new low-income homes built per year as a result of these extra tax credits, not 20,000.

“I think it’s going to take us a couple of years to ramp up,” he said.

Another potential obstacle: The cuts Trump’s spending package imposes on other areas — including the cuts to Medicaid that are expected to result in 3.4 million Californians losing coverage over the next 10 years — could exacerbate poverty for many people and undermine the benefits of the tax credits. 

“It’s a tremendous irony,” Schwartz said, “that (the tax credit increase) was in this incredibly harmful ‘big ugly bill,’ as we call it.”

For the record, a previous version of this story mischaracterized the scope of the housing bond that was pulled off the ballot last fall. It was a Bay Area regional bond.

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The forces of housing won. 

With the passage of a state budget-related housing bill, the California Environmental Quality Act will be a non-issue for a decisive swath of urban residential development in California. 

In practice, that means most new apartment buildings will no longer face the open threat of environmental litigation. 

It also means most urban developers will no longer have to study, predict and mitigate the ways that new housing might affect local traffic, air pollution, flora and fauna, noise levels, groundwater quality and objects of historic or archeological significance.

And it means that when housing advocates argue that the state isn’t doing enough to build more homes amid crippling rents and stratospheric prices, they won’t — with a few exceptions — have CEQA to blame anymore.

“Saying ‘no’ to housing in my community will no longer be state sanctioned,” said Assemblymember Buffy Wicks, an Oakland Democrat who introduced the CEQA law as a separate bill in March. “This isn’t going to solve all of our housing problems in the state, but it is going to remove the single biggest impediment to building environmentally friendly housing.”

Unlike most environmental laws, which explicitly mandate, monitor or ban certain environmental behavior, CEQA is just a public disclosure requirement. The 54-year-old statute requires state and local governments to study and publicize the likely environmental impact of any decisions they make. That includes the permitting of new housing. 

But for years, the building industry and “Yes in my backyard” activists have identified the law as a key culprit behind California’s housing shortage. That’s because the law allows any individual or group to sue if they argue that a required environmental study isn’t accurate, expansive or detailed enough. Such lawsuits — and even the mere threat of them —add a degree of delay, cost and uncertainty that make it impossible for the state to build its way to affordability, CEQA’s critics argue.

With today’s vote, the Legislature is putting that argument to the test. Gov. Gavin Newsom, who spent much of last week cajoling the Legislature to pass the bill as part of his budget package, signed it on Monday evening.

Now the question is whether this monumental political and policy shift will actually result in more homes getting built in California’s cities.

Many of the bill’s backers are optimistic.

“I think when we look back on what hopefully is California finally beginning to confront this housing crisis, this year — 2025 — and this bill will be viewed as a turning point,” said Matt Haney, a Democrat who represents San Francisco in the Assembly where he chairs the housing committee.

On paper, the new law, unlike most that deal with housing approvals and environmental regulation, is actually pretty straightforward.

Urban “infill” housing developments — housing built in and around existing development — are no longer subject to CEQA.

There are some exceptions and qualifiers, but development boosters say they are relatively minor. 

The exemption is “the most significant change to the California Environmental Quality Act’s effect on housing production since CEQA was passed,” said Louis Mirante, a lobbyist for the Bay Area Council, a business coalition that regularly pushes for legislation that makes it easier to build.

The bill is limited to projects under 20 acres, but that cap is only relevant to the biggest multi-block-spanning mega developments.

A certain level of density is required, but it really only precludes using the policy for single-family home construction.

Before any project can move forward, any affiliated tribal government will have to be notified first, but the consultation is put on a short timeline.

In order to qualify for the exemption, a proposed project must also be consistent with local zoning, the regulations that determine what types of buildings can be constructed where. But thanks to another CEQA-chopping bill authored by San Francisco Democratic Sen. Scott Wiener that exempts many changes to zoning rules from CEQA and which is also packed into the budget, that appears less likely to be a real constraint. 

To buy off the ferocious opposition of the State Building and Construction Trades Council of California, a construction union umbrella group, the bill also includes some higher wage requirements. 

But those rules are not likely to apply to most potential residential development projects. “The lion’s share of housing being built” in California will no longer be governed by CEQA, said Mark Rhoades, a planning and development consultant in Berkeley.

Take a massive five-story apartment building spanning a full city block, said Bill Fulton, a longtime urban planner and professor at UC San Diego. 

“You don’t have to worry about labor and you don’t have to worry about CEQA? That’s a big deal,” he said.

CEQA seachange

What a difference nine years make.

Consider how things went back in 2016 when then-Gov. Jerry Brown tried to ram a CEQA fix for California’s rising housing costs through the state budget process. Brown’s big idea was to “streamline” the housing approval process, allowing developers to make an end-run around the California Environmental Quality Act, so long as they set aside a certain share of units for lower-income residents.

A coalition of construction labor unions, environmental interests and local government groups torched the idea. The proposal didn’t even get a vote.

Nearly a decade later, once again a Democratic governor opted to stuff a CEQA-trimming policy package through the budget process in the name of cheaper housing. 

The measure passed overwhelmingly in both the Senate and Assembly — and this time it didn’t even include an affordability requirement.

Wicks’ proposal is somewhat narrower than the 2016 version, exempting only infill. New suburban-style subdivisions carved from farmland or undeveloped sagebrush will not qualify. 

That infill focus has made it easier for the Democratic-controlled Legislature to swallow such a significant scaling back of California’s signature environmental law. Promoting denser urban development generally means using less land, constructing new housing that uses less energy and setting up new residents to do a lot less driving. 

“When you are building housing in an existing community, that is environmentally beneficial, it is climate friendly, that is not something that should be subjected to potentially endless CEQA challenges and lawsuits,” Wiener said on the Senate floor on Monday just prior to the vote, when the measure passed 28 to 5.

Even so, Wicks’ proposal always looked like a long shot. 

Since Brown’s failed gambit, lawmakers have managed to pass a raft of bills giving housing developers an escape route around CEQA. But those laws have always contained a trade-off. Developers get to skip CEQA, but in exchange they have to pay state-set “prevailing wages” (which typically work out to union-level pay), hire union workers outright, set aside a certain share of units for lower income residents, or some combination of the three. 

These conditions were born of political necessity. A CEQA lawsuit — or even the suggestion of one — makes for a powerful negotiating tool. Organized labor groups, most especially the building trades council, have not been keen to give up that leverage without getting something in return.

As housing developers proved less willing to use the new streamlining laws than those bills’ sponsors and supporters had hoped, many pro-building advocates, academics and commentators began calling for environmental streamlining with no strings attached.

Wicks answered that call earlier this year. Under her proposal, infill developers would be allowed to ignore CEQA, full stop. That marked a major break from recent legislative precedent, and one that seemed a stretch, even with so many Democratic lawmakers carting around copies of Abundance.

The deal that almost wasn’t

Just last week, Wicks’ proposal seemed on the verge of collapse.

A version of the bill introduced last week included what amounted to a minor wage hike for the lowest paid construction workers, who are virtually all non-union. While the state’s carpenters’ union supported it, the trades council emphatically did not — with one of the groups’ associated lobbyists likening it to Jim Crow. The trades objected so strenuously — arguing that it set dangerous precedent and undercut apprenticeship programs — that lawmakers removed the proposed wage change. 

Instead, developers working on projects that are entirely designated to be affordable would now be required to pay prevailing wages in order to take advantage of the new law. 

Developers of any projects over 85 feet tall would be required to hire a certain share of union workers. There are added restrictions for construction in San Francisco specifically.

By the standards of prior housing streamlining bills, those are relatively modest concessions. Most developments over 85 feet use concrete and steel frame construction, which require a higher skilled labor force that is often unionized anyway.

Most entirely income-restricted housing projects make use of public subsidies that require paying union-level wages.

“Affordable housing is forced to play by different rules because the state has decided that if you are receiving public funds a certain wage should be attached to it,” said Ray Pearl, executive director of the California Housing Consortium, which advocates for affordable housing construction. The addition of a prevailing wage requirement for affordable housing “is a head scratcher,” he said. “But it really is reaffirming existing policy.”

That leaves every other type of housing project: Market rate and mixed-income apartment buildings under seven-or-so stories. For that type of construction, which defines the bulk of urban development in California, CEQA is soon to be entirely optional — no strings attached.

That this is the new trades-endorsed deal has been met with a perplexed kind of glee from some corners of the “yes in my backyard” movement. The new version of the bill “is now *even better,*” UC Davis law professor Chris Elmendorf marveled on Twitter.

Will it matter?

What will urban housing construction look like in California without CEQA?

There are no shortage of reasons not to build housing in California. Labor costs, even without regulatory requirements, are high. So are interest rates. Tariffs and aggressive immigration enforcement are more recent sources of uncertainty. Developers are always happy to complain about slow permitting, high local fees and inflexible building codes. 

“It’s not the CEQA costs that are holding up housing,” said Rhoades, the Berkeley consultant. 

“I don’t think this is going to make more development happen,” he said of the budget bill. “It’s going to make development that is already happening a little easier.”

Critics of the half-century-old environmental law can and do point to specific projects — housing for students, housing near public transit, affordable housing built upon city-owned parking lots — that have been sued in the name of the environment as examples of “CEQA abuse.”

Under the new laws, such litigation will largely go away in California’s cities.

“The one thing we do know is that CEQA is a time suck,” said Ben Metcalf, managing director of UC Berkeley’s Terner Center for Housing Innovation and the former head of the state’s housing agency under Brown. “If you can just get out of that six months, nine months, twelve months of delay, that takes a whole cohort of projects and gets them in the ground sooner. In a state that’s facing a housing crisis, that’s not for nothing.”

But the more important consequence of CEQA, many of its critics regularly argue, has been its chilling effect. 

How many new units of housing would have been built, but for concerns that they might become ensnared in environmental litigation? How many developers, anticipating a possible legal challenge, have preemptively pared back their plans? How many financiers of housing projects pulled out or demanded higher interest rates over such concerns?

California may soon find out.

The post One of the biggest obstacles to building new CA housing has now vanished appeared first on The Hemet & San Jacinto Chronicle.

Another was designed to turn under-used church parking lots into fonts of new affordable housing.

A third would, according to supporters and opponents alike, “end single-family zoning as we know it.”

Fast-forward to 2025 and this spate of recent California laws, and others like it intended to supercharge the construction of desperately needed housing, have had “limited to no impact on the state’s housing supply.”

That damning conclusion comes from a surprising source: A new report by YIMBY Law, a pro-development nonprofit that would very much like to see these laws work. 

The analysis, released today, studied five state laws passed since 2021 that have swept away regulatory barriers to building apartment buildings and other dense residential developments in places where such housing has been historically barred. 

The laws under review include:

• SB 9 from 2021, which allows people to split their single-family homes into duplexes, thus ending single-family-home-only zoning across California. In practice, according to the report, building permits for only 140 units were issued under the law in 2023.  
• AB 2011 from 2022 was designed to make it easier for developers to convert office parks, strip malls and parking lots into apartment buildings. In 2023, developers on just two projects were given local regulatory approval to start work under the law. In 2024, the total was eight. The report found no projects that have made use of SB 6, a similar bill passed that same year but with stricter labor requirements.
• SB 4 from 2024, the so-called Yes In God’s Backyard law, which lets churches, other houses of worship and some schools to repurpose their land for affordable housing. The report found no takers on that bill too.

“It’s grim,” said Sonja Trauss, executive director of YIMBY Law. Though she acknowledged some of the laws are still new, she blamed their early ineffectiveness on the legislative process which saddled these bills with unworkable requirements and glaring loopholes. 

“Everybody wants a piece,” she said. “The pieces taken out during the process wind up derailing the initial concept.”

What are these requirements and loopholes that have prevented these laws from succeeding? Maybe not surprisingly, they are the frequent objects of critique by YIMBY Law and the Yes In My Backyard movement more generally. 

One is the inclusion of requirements that developers only hire union-affiliated workers or pay their workers higher wages. 

Another are affordability mandates which force developers to sell or rent the units they build at below-market prices.

A third is the strenuous opposition by local governments and the failure of these state laws to override it. In the two years following the passage of SB 9, for example, YIMBY Law tracked 140 local ordinances that, in the view of the report, were “designed to reduce or prevent” the bill from working on the ground. They included tight limits on the size of buildings, affordability requirements, or restrictions on which types of owners can make use of the law. 

Last year, the state Legislature passed a “clean up” bill meant to void some of these local add-ons.

There are plenty of other possible impediments to construction in California, which may explain why these bills have seen such tepid uptake. Sky high interest rates, chronic shortages of construction workers and high material costs (all of which could be exacerbated by current or expected changes to federal tariff, immigration and fiscal policy) all work to make residential housing development a less appealing financial proposition. Insufficient public funds and expected cuts to federal housing programs may weigh down on the affordable housing sector too.

But the report is not the first to point to the preconditions and omissions included in so many of the state’s legislative efforts to goose housing development as the reason for their lack of impact.

In a recent law paper, UC Davis law professor Chris Elmendorf and UC Santa Barbara political scientist Clayton Nall wrote that the relative success of California’s efforts to boost the construction of accessory dwelling units is the exception that proves the rule. Over the last decade, a cavalcade of state laws have stripped local governments of their ability to subject backyard cottage projects with environmental review mandates, significant fees, affordability mandates, union-hire rules, confining size or aesthetic limitations or added parking requirements. 

“The ADU boom stands alone. No other form of housing production took off in California during this period,” the authors wrote. A likely reason why, they argue, is that ADU projects don’t come with nearly as many strings attached as other forms of dense development permitted by various California laws.

In 2023, the state permitted more than 28,000 ADUs, according to state data.

The history of ADU legislation in California is instructive, said Trauss. “It took about like five years of revisions before they were really getting going.”

The YIMBY Law report is based on self-reported permitting data submitted by cities and counties to the California Housing and Community Development department. The nonprofit complemented that messy database with its own internal collection harvested from its own litigation and activism. That means the data on what is actually getting built — and therefore how effective any of these laws really are — is imperfect. 

That fact isn’t lost on many legislators. 

The Assembly housing committee’s first hearing of the year was dedicated not to new legislation, but to evaluating the state’s existing “pro-production” laws.

“We shouldn’t just keep passing more and more bills just because we can,” Chair Matt Haney, a San Francisco Democrat, said. “We should actually look at what is working, why it’s working, how we can do more of what’s working and if it’s not working, we should do more to fix it or change it.”

The post ‘Limited to no impact’: Why a pro-housing group says California’s pro-housing laws aren’t producing more appeared first on The Hemet & San Jacinto Chronicle.