In 2017, California lawmakers broke through a longstanding logjam of anti-housing sentiment, unleashing 15 landmark bills that sought to boost new construction across the state. Six years later, the 2023 legislative session saw 56 housing bills signed into law, evidence the tide has yet to turn on efforts to increase home affordability in the state.
Unlike the controversial 2017 session — and the years of big housing battles that followed — 2023 was largely free of contentious fights over blockbuster bills, replaced with the steady shearing of restrictions on new housing and shoring up of protections designed to keep renters in their homes.
Matthew Lewis, spokesman for California YIMBY, which advocates for building more housing, said the lack of controversy has a simple explanation: There were more legislators from all the parts of the state carrying housing bills.‘We do not have to accept the status quo of the intensifying housing and homelessness crisis that our communities are experiencing across the state.’Amie Fishman, executive director, Non-Profit Housing Association of Northern California
“The legislature is essentially now pro-housing,” he said. “Pretty unequivocally and objectively, you can say that the legislature wants to solve the housing crisis.”
The coming year appears poised to continue the trend of incremental legislative change, in part because of how many bills have already been approved. More than 100 housing production laws have gone into effect since 2017, and new construction has indeed increased, with nearly 114,000 homes and apartment units permitted, on average, since 2018, up roughly 17% compared to the five-year average between 2013–2017, according to the Construction Industry Research Board (PDF).
Laws to increase granny flats and backyard cottages have been particularly successful, with accessory dwelling units now accounting for more than 10% of all housing units built since 2018 and 18% of all completed units in 2022.
RELATED STORIESSan Francisco Takes Forever to Approve New Housing. California Officials Are Forcing ChangeCalifornia’s Rent Hikes Hit Low-Income HousingCalifornia Housing Projects for Unhoused on Hold as Developer Defaults
But despite this success, it hasn’t been enough to move the needle on affordability, which remains at historic lows. According to the California Association of Realtors, just 15% of Californians could afford the median-priced single-family home in 2023, down from 27% in 2018. And more than half of all tenants spent over a third of their income on rent, indicating housing insecurity.
Meanwhile, homelessness increased — up nearly 40% since 2018, compared to an 18% rise nationally, according to the federal Department of Housing and Urban Development (PDF). And while California more than tripled the number of homes built (PDF) for low-income renters between 2019 and 2022, it is still building only around 20% of its goals, according to the California Housing Partnership.
As the state stares down a projected $68 billion budget deficit, securing additional funding will be especially critical in 2024, said Amie Fishman, executive director of the Non-Profit Housing Association of Northern California. Her organization is currently working to put a $10 billion regional housing bond for the Bay Area on the ballot, which might coincide with another proposed $10 billion statewide housing bond.
Already on the March 2024 ballot is Prop 1, a $6.38 billion bond championed by Gov. Gavin Newsom to build new housing and treatment centers for people undergoing behavioral and mental health treatment.
READ ALSO: Nigerian Housing Market Outlook For 2024
“The forward motion [last] year was a reinforcement that we can make forward progress, that there are solutions, that we can make a difference,” she said. “We do not have to accept the status quo of the intensifying housing and homelessness crisis that our communities are experiencing across the state.”
The proposed funding comes amid a tough environment for builders, renters and home buyers alike as high interest rates and the struggling insurance market continue to drive up housing costs.
Home prices are expected to continue to grow at a roughly 6% pace in 2024, said Sanjay Wagle, head of government affairs for the California Association of Realtors. He said the supply of homes for sale will likely improve, but not enough to offset the corresponding increase in demand that is expected to be further boosted by decreasing mortgage rates.
Joshua Howard, with the California Apartment Association, said uncertainty in the job market could lead to uncertainty in the rental market. But, with mortgage rates still higher than they had been in the past, some would-be homebuyers will choose to continue renting.
“So, it’ll be an interesting 2024,” he said.
Here are some of the housing bills going into effect in 2024:
SB 4 (Wiener): The third year was the charm for the so-called “Yes in God’s Backyard” law. It allows 100% affordable housing developments to be built on land owned by religious institutions and nonprofit colleges or universities. It also exempts those projects from the California Environmental Quality Act and requires construction workers to be paid the prevailing wage. The Terner Center for Housing Innovation at UC Berkeley estimates 171,000 acres of developable land would be eligible to take advantage of the new law, which goes into effect on Jan. 1.
SB 423 (Wiener): In 2017, lawmakers passed SB 35 as one of more than a dozen landmark housing bills. The law, which was set to sunset in 2026, requires cities to approve certain housing projects that meet minimum affordable housing requirements if the city has not met its state-mandated housing targets. Another Terner Center report (PDF) credited the bill with adding some 18,000 housing units between 2018 and 2021. SB 423 extends the provisions of SB 35 through 2036.
SB 684 (Caballero): The law streamlines the approval process for small, infill apartment buildings with up to 10 units on vacant lots in neighborhoods where apartments are already allowed. It also includes protections against demolishing existing rent-controlled or affordable housing. The bill initially included single-family neighborhoods, which tend to be wealthier and whiter than neighborhoods with existing apartment buildings, but that provision was later removed. Adam Briones, CEO of California Community Builders, said the move “reinforces an unfortunate message that many people of color still feel is true: Our neighborhoods matter less to those in power than wealthy, white neighborhoods. This echo of California’s discriminatory past will unfortunately make it harder to build support for housing production in communities of color.” Matthew Lewis from California YIMBY said his organization would be lobbying for a new bill in 2024 to allow small apartment buildings in single-family neighborhoods.
AB 12 (Haney): Landlords in California have been allowed to charge two months’ rent as a security deposit for unfurnished apartments or homes and up to three months’ rent for furnished ones. AB 12 limits security deposits to one month’s rent, regardless of whether the residential property is furnished or unfurnished. It goes into effect on July 1, 2024.
SB 567 (Durazo): In 2019, California lawmakers passed the Tenant Protection Act, which was hailed at the time as one of the strongest laws of its kind in the nation. It capped rent increases at 10% in most rental properties that were built at least 15 years ago and imposed new eviction protections. Many tenant activists, however, felt it didn’t go far enough. SB 567 sought to strengthen the eviction protections in the 2019 law by limiting so-called “renovictions,” where landlords evict tenants to complete major repairs on the property. It also heightens the penalties for landlords who claim they are taking the property off the rental market only to re-rent the units, among other provisions. It goes into effect on April 1, 2024.
AB 1418 (McKinnor): The law aims for “crime-free housing” policies, which often require landlords to evict or otherwise penalize tenants if they have been arrested or had a criminal conviction or refuse to rent to them in the first place. The policies have been shown to impact people of color disproportionately. The new law does not stop landlords from performing background checks, only city policies that require them.
Environmental Restrictions Removed
AB 1449 (Alvarez): This law exempts 100% affordable housing projects from the California Environmental Quality Act, which can delay projects for years. Christopher Martin, policy director for Housing California, described it as one of the most impactful bills of the year. “It’s going to open up a lot more affordable housing,” he said. The law is scheduled to sunset in Jan. 2033.
SB 1307 (Wicks): The law makes clear that noise from students in university housing does not fall under the purview of the California Environmental Quality Act. It resulted from a California appeals court ruling in February that ruled it could. The case arose after a neighborhood group brought suit over UC Berkeley’s plan to construct housing for 1,100 students and more than 100 homeless residents at People’s Park.
AB 1633 (Ting): In 2021, the San Francisco Board of Supervisors failed to approve a 500-unit housing project atop a parking lot, claiming the project needed “further environmental study,” though it did not specify a clear direction for how to bring the project into compliance. AB 1633 clarifies that withholding clearance of a housing development that otherwise meets the requirements of the California Environmental Quality Act is a violation of state housing law.
AB 976 (Ting): When accessory dwelling units, also known as casitas, granny flats or in-law units, were first legalized, many local governments required they only be built on properties where the owner also lived, a rule that stymied construction. A 2019 bill, AB 881, made it illegal to require owners to live on-site. That was set to sunset in 2025, but AB 976 makes it permanent.
AB 1033 (Ting): Under this new law, local governments can allow property owners to sell an accessory dwelling unit separately from the primary residence, essentially turning that casita into a condominium.
ACA 1 (Aguiar-Curry): If voters approve this constitutional amendment in November, it would lower the threshold to approve bonds and special taxes for affordable housing and public infrastructure projects from a two-thirds supermajority to 55%. If it passes, any bonds on the same ballot would be approved under the new threshold.
AB 1532 (Haney): Faced with an office vacancy rate of nearly 34% in San Francisco and more than 15% in Los Angeles, the bill would legalize conversions of office spaces to housing across the state. It also modernizes state building codes to make bringing older buildings up to code easier.