California Governor Signs New Affordable Housing Legislation


The lack of affordable housing in California is an issue that continues to plague residents of the Golden State. The statewide median home price currently sits at $565,330 and is expected to rise well into 2018. That’s more than twice the national average of $253,500.

In fact, it’s anticipated that the run of increasing housing prices in California will last as long as five more years, with median prices on pace to surpass the record highs that were seen throughout the housing bubble a decade ago.

According to the California Association of Realtors (CAR), home prices are expected to increase another 4.2% in 2018 to $561,020. That number exceeds the record high of $560,270 from 2007. The number of single-family home sales also are expected to jump in 2018 – albeit at a slower pace – to 426,200, an increase of 1% from 2017.

Housing Construction and Sheltering the Homeless Among Issues Targeted

In response to this affordability crisis, Governor Jerry Brown recently signed housing legislation. Lawmakers approved 15 bills that would tackle the problem in various ways. One of the biggest issues being addressed by the new laws are the obstacles that homebuilders face when dealing with city councils.

Lack of fiscal incentives to approve housing from local governments, environmental policies, and the high cost to build in California have made it difficult for homebuilders to erect new homes to meet the growing demand for housing in the state. These factors have all contributed to the inability for housing starts to match housing demand for years, creating a dire housing affordability situation in California that has prompted the attention of lawmakers to do something about it.


More prominent of all the 15 bills signed is Bill SB 35, which addresses this issue of lack of home construction and development. The bill will allow housing developments to circumvent city councils where state-mandated housing objectives fail to be met.

In March 2015, the state Legislative Analyst’s Office put out a report which stated that California needs to increase homebuilding by 100,000 units per year in order to ensure housing costs would be at par with national growth rates, as well as to tackle community opposition and environmental laws that hinder homebuilding. The signing of Bill SB 35 is designed to address these concerns.

The new legislation is also addressing the need to provide shelter for the homeless across the state. Among all states in the U.S., California has the largest share of unsheltered homeless at 66.4%.

Wage and Employment Increases Don’t Seem to Impact the Affordability Crisis

The big question when it comes to California’s housing market is why the rate of price growth and sales isn’t higher, considering the fact that jobs and wages have been on the rise. The answer is rather simple: there is a major shortage of inventory and too few buyers who have the robust incomes to afford homes that are listed at sky-high prices. It’s a problem that has been ravaging the state’s housing market for the past four years.

Even sellers can suffer as a result of such a price-inflated environment. Despite experiencing huge price gains, they can be slapped with capital gains tax if they make a profit of more than $250,000 ($500,000 for married couples).

While the signing of this new legislation to address the housing affordability crisis in California, it’s just the start of a long road ahead until the issue is minimized. State Senator Scott Wiener promises that there will be more bills to come to continue tackling this growing problem that has made it extremely difficult for the average California resident to become a homeowner.