Despite a slight population decline during the pandemic, California still struggles to find enough housing for the 39 million people who call California home (and the many people who would love to move to California, if only housing were available!).
California housing data confirms that the tight housing market is getting tighter. The number of homes available for sale was down by 11.6% in April 2022 compared to April 2021. And the average home sold in just 18 days (compared to nearly 40 days pre-pandemic). The high demand and low supply have driven prices up by another 13.3% over the past year state-wide, bringing the median sales price up over $850,000. Of course, residents in high-value markets like the Bay Area would love to find a property for $850,000! In San Francisco, for example, the median is over $1.6 million.
So what is California doing to address the housing shortage? Here are three key legislative changes intended to ease the housing crisis.
1. Streamlining the Building Process
Multiple bills were passed between 2019 and 2022 to help builders complete developments faster.
AB 1485 was passed in 2019 to “build on existing environmental streamlining law and encourage moderate-income housing production.”
SB 330 was passed in 2019 to “accelerate housing production in California by streamlining permitting and approval processes, ensuring no net loss in zoning capacity and limiting fees after projects are approved.”
And SB 10 was passed in 2021 to allow local city councils to speed the construction of apartment complexes of up to 10 units, as long as those new developments are located near transit hubs and urban infill areas.
2. Allowing Build Multiple Units on Single-Family Lots
One major hurdle in the effort to address the housing shortage is the number of single-family lots in California. Compared to urban areas on the East Coast, California has a lower population density because so much of the state is zoned for buildings that can accommodate a single family. Multi-family lots ease the housing shortage by allowing more households to fill a single lot.
So legislation has been passed to allow for more units on single-family lots.
AB 68, passed in 2019, “makes major changes to facilitate the development of more ADUs [accessory dwelling units, commonly called guest houses or in-law quarters] and address barriers to building. The bill reduces barriers to ADU approval and construction, which will increase production of these low-cost, energy-efficient units and add to California’s affordable housing supply.”
But even that wasn’t enough. So in 2021, SB 9 was passed. SB 9 allows property owners to build duplexes (two housing units) on single-family lots. And, in some cases, property owners can now build up to four units on a single-family lot.
3. Making More Land Available
One final way California is combatting the housing shortage is by trying to make more land available for development. Between mountains, deserts, and coastlines, much of the state is not geographically conducive to real estate development. There are also state lands that could be developed if the public could access those areas.
SB 6, passed in 2019, “requires the state to create a public inventory of local sites suitable for residential development, along with state surplus lands.”
It Will Take Time for These Changes to Take Effect
While these measures will allow for more housing units to help meet the demand of the population, it could be years before we see results. We need time to build these new units. There is a long waitlist for many home builders, and ongoing supply chain issues are making it difficult to get building materials.
If you’re hoping to buy a home in California, you might not want to wait until new units are available. With interest rates rising, the cost of buying a home is going up. Even if home prices flatten, which isn’t guaranteed, the cost of your loan could reduce your purchasing power.
To buy in this market, you just need an experienced real estate agent who can give you a heads-up on new listings and advise you on pricing and negotiations. Contact Sequoia Real Estate for a free consultation with a Bay Area market expert today.