A sweeping piece of federal housing legislation — the largest of its kind in decades — quietly became law earlier this month, and while it may not immediately change the day-to-day reality for Southern California renters and homebuyers, housing advocates say its ripple effects could be felt across the Inland Empire and beyond in the years ahead.
The bill didn’t arrive with the fanfare typically reserved for major legislation. It became law just after midnight without a signing ceremony, after President Trump declined to formally sign or veto it. The White House had actually scrapped a planned bill-signing last month amid a dispute over an unrelated voter ID measure stalled in the Senate. But under constitutional rules, a bill that sits unsigned for 10 days automatically becomes law — and that’s exactly what happened.
Despite the anticlimactic rollout, supporters describe the measure as historic: a rare bipartisan effort, born from a partnership between Republican Sen. Tim Scott of South Carolina and Democratic Sen. Elizabeth Warren of Massachusetts, aimed at chipping away at the nation’s housing shortage through dozens of smaller policy changes rather than one sweeping fix.
“We don’t often gather to celebrate federal housing legislation,” said Stephen Russell, president of the San Diego Housing Federation, at a press conference last week. “The last time Congress passed anything of this magnitude, many of you weren’t even alive. It’s almost a once-in-a-lifetime event.”
The law contains 56 separate provisions — regulatory adjustments, pilot programs, new loan products and grant incentives. None of them, on their own, is expected to solve California’s housing affordability crisis. But taken together, backers argue they could meaningfully shift the trajectory for cities that have struggled for years to build enough homes.
A carrot-and-stick approach for slow-growth cities
One of the more consequential changes targets the Community Development Block Grant program, a major federal funding stream for affordable housing and local development projects. Under the new law, expensive cities that consistently underbuild housing — based on measures like median home prices and vacancy rates — could see their grant funding cut by 10 percent. Those dollars would then be redirected to nearby cities that are building housing at a faster pace.
Housing policy experts say the change could have real consequences for cities such as Los Angeles and San Francisco, both of which have long lagged behind housing production goals. Los Angeles received roughly $48.4 million through the block grant program in 2024; San Francisco received about $18.9 million.
“I think this will be a small nudge,” said Laura Foote, executive director of YIMBY Action. “Which, taken across the country, could still have a good impact. Little nudges add up.”
More significant than the dollar amounts, experts say, is the precedent being set. Even California, which has aggressively pushed cities to plan for new housing, has never directly penalized municipalities for failing to actually build it — an outcome that isn’t always within a city’s control. David Garcia, deputy director of policy at UC Berkeley’s Terner Center for Housing Innovation, called the idea “inconceivable in previous congresses.”
Still, local government advocates haven’t pushed back hard against the change. The National League of Cities praised the broader law, noting it also includes new flexibility for how block grant dollars can be spent and new support for local planning efforts.
Easing rules for manufactured housing
The law also eliminates a long-standing federal building requirement that manufactured homes — often called mobile homes, even though most never move after being installed — be built on a permanent steel chassis.
Originally intended to make the homes easier to transport, the chassis in practice adds a bulky, expensive layer beneath the floor that serves little purpose once a home is placed on a permanent foundation. Removing the requirement, something industry advocates have sought since the 1980s, is expected to lower costs and make it easier to build multi-story manufactured homes or stack units into apartment-style buildings.
“That relatively minor change will expand access to one of the most affordable forms of home ownership available,” said Rep. Scott Peters, a San Diego Democrat.
Jess Maxcy, president of the California Manufactured Housing Institute, said the shift won’t spark an immediate building boom, but in a state where land costs push builders toward denser development, it “provides more opportunities and helps us reduce the price.”
More certainty for disaster recovery funding
For communities recovering from wildfires and other disasters, the law formally establishes — for at least three years — the Community Development Block Grant-Disaster Recovery program, which has funneled more than $100 billion nationally into long-term rebuilding efforts like housing construction and infrastructure repair.
Until now, the program operated on an ad hoc basis, requiring separate congressional funding after each disaster — a process that has left communities like Los Angeles, still recovering from the 2025 firestorms, without any allocated funds so far. The new law won’t immediately send fresh dollars to fire-affected areas, but it does create a framework allowing the Department of Housing and Urban Development to have funding ready in advance and make decisions within 15 days of a disaster.
“It creates the ability for HUD to have money on hand before a disaster and then make a decision within 15 days about whether they’re going to provide funding,” said Marion McFadden, a former HUD official who ran the program under President Biden.
Removing a cap on public housing conversions
The law also lifts a longstanding cap on the Rental Assistance Demonstration program, which allows public housing authorities — including those in Los Angeles and the Bay Area — to tap private financing to renovate aging public housing stock. The previous 455,000-unit cap will rise by another 100,000 units.
“This has been a bottleneck in California for years, and that bottleneck just got removed,” Russell said.
Not everyone is celebrating the expansion. The National Low Income Housing Coalition has raised concerns that shifting funding sources could weaken tenant protections, though a recent study found no clear evidence that such conversions lead to increased evictions.
A modest curb on corporate homebuying
Perhaps the most talked-about provision bars “large institutional investors” — defined as entities controlling more than 350 single-family homes — from purchasing additional houses. The rule doesn’t apply retroactively, exempts new construction, renovations and senior housing, and is unlikely to have much impact in California, where large investors play a relatively small role in the housing market compared with other states.
Chad Maisel, a fellow at the Center for American Progress and former housing adviser to President Biden, described the provision as “a pretty modest intervention” to a politically popular issue. Still, it drew support from across the spectrum — Trump called for even tougher restrictions on corporate landlords earlier this year, and Gov. Gavin Newsom voiced similar concerns days later.
An earlier, tougher version of the provision had threatened to disrupt “build-to-rent” developments — planned communities of single-family rental homes — prompting pushback from developers and pro-housing advocates who argued such projects help address a shortage of family-sized rental housing. That language was ultimately removed from the federal bill.
In California, state Sen. Aisha Wahab of Fremont, now a congressional candidate, introduced a related bill, SB 880, that would have banned bulk sales of single-family homes to investors — striking directly at the build-to-rent business model. That legislation died in the Assembly Judiciary Committee in late June.
Original source: CalMatters
