Progress, Pushback, & the Policies Shaping Our Future | September 2026
California’s housing shortage remains one of the state’s most significant economic and social challenges. The California Department of Housing and Community Development (HCD) estimates that California needs approximately 2.5 million additional homes by 2030, including roughly one million affordable units for lower-income households.[1] While Sacramento has recently enacted meaningful reforms to boost housing production, significant obstacles remain.
I’ve often challenged those who oppose new housing in their communities to think about the next generation. If we continue to restrict housing supply, will our children and grandchildren be able to afford to live near us? For many California families, that question is becoming increasingly difficult to answer. The shortage of housing is no longer a future concern. It’s affecting affordability, economic opportunity, and quality of life today.
What’s Helping Housing
Transit-Oriented Development (SB 79)
One of the most impactful housing laws taking effect this year is Senate Bill 79 (SB 79), the Abundant and Affordable Homes Near Transit Act, which allows higher-density residential development near major transit stops and limits local zoning restrictions that have historically constrained housing production. Effective July 1, 2026, the law is intended to encourage more housing where infrastructure already exists and could enable substantial new housing capacity across transit-rich regions.[2]
By creating statewide standards for transit-oriented development, policymakers are attempting to align housing production with existing infrastructure. Proponents estimate the legislation could make it possible for as many as 1.5 million additional homes to be built throughout transit-rich regions of California over time.[3]
California Environmental Quality Act (CEQA) Reform
California also enacted significant CEQA reforms through AB 130 and SB 131, streamlining approvals for qualifying infill housing projects and reducing regulatory delays that have historically increased costs and slowed development. The reforms are widely viewed as some of the most significant housing-related environmental review changes in decades.[4] The long-term impact remains to be seen, but reducing regulatory friction is likely to improve the feasibility of many projects that previously would not have moved forward.
Prohousing Incentives
The state’s Prohousing Designation Program continues to reward cities that adopt housing-friendly policies. In August, Governor Newsom announced $11.3 million in funding awards to 13 Prohousing communities, reinforcing the state’s push to align local incentives with housing production goals.[5] Programs like this recognize an important reality: housing shortages cannot be solved solely from Sacramento. Local governments ultimately control much of the approval process, and aligning local incentives with state objectives is increasingly becoming a critical part of California’s housing strategy.
While policy reforms are important, progress ultimately happens one project at a time. I’m encouraged by recent approvals that demonstrate many cities recognize the need for additional housing. In July 2026, the Buena Park City Council unanimously approved the 281-unit residential development at 5600 Beach Blvd. Projects like this if completed help address the housing shortage while creating thoughtfully planned communities that can serve residents for generations.
What’s Hindering Housing
Local Resistance
Despite statewide reforms, many communities continue to resist higher-density housing. The implementation of SB 79 has already revealed efforts by some jurisdictions to limit or modify the law’s impact through local ordinances and alternative plans.[6]
This continued resistance underscores a broader challenge facing California. While many residents support the idea of housing in principle, opposition often emerges when projects are proposed nearby. Communities must consider whether restricting new housing today will make it harder for future generations to remain close to family and employment opportunities tomorrow.
Project Economics
Even with streamlined approvals, many projects face challenges from elevated construction costs, financing costs, labor expenses, and insurance premiums. In fact, according to the California Legislative Analyst’s Office, California homes remain roughly twice as expensive as the typical U.S. home, and payments on a mid-tier California home increased dramatically between 2020 and 2025.[7]
Another factor receiving less attention is the lending environment. Across the industry, lenders have become more cautious, and securing financing has become more challenging than it was several years ago. We’ve seen some of our own projects experience delays as capital providers take a more conservative approach and carefully evaluate market conditions. Even when a project has community support and regulatory approvals in place, access to financing remains a critical piece of getting housing built.
Looking Ahead
From my perspective, California’s policy environment is becoming increasingly supportive of housing production, but turning legislation into actual homes will require local implementation, access to capital, and a continued willingness to approve new housing. While California’s housing shortage was decades in the making, recent reforms and project approvals represent meaningful progress toward a future where more families can afford to live and remain close to the communities they call home.
Disclosures
References to proposed projects, governmental approvals, market conditions, and potential housing capacity do not assure that any project will obtain financing, commence construction, be completed, or achieve any particular financial or community outcome.
Third-party information is believed to be reliable as of the publication date, but its accuracy or completeness is not guaranteed. Readers should review the cited sources directly.
This communication is provided for informational and educational purposes only. The views and opinions expressed herein are those of the author as of the date of publication and are subject to change without notice.
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[1] Source: https://www.sandag.org/projects-and-programs/regional-initiatives/housing-and-land-use/housing-acceleration-program/-/media/684670313C4F40029611A2965AF52DC9.ashx
[2] Source: https://www.hcd.ca.gov/planning-and-research/sb79-tod
[3] Source: https://davisvanguard.org/2026/07/california-housing-law-sb79-2/
[4] Source: https://www.loeb.com/en/insights/publications/2026/01/2025-california-housing-legislative-update-updated-jan-8-2026
[5] Source: https://www.gov.ca.gov/2026/08/20/governor-newsom-awards-11-3-million-to-13-prohousing-communities-to-build-more-affordable-housing/
[6] Source: https://www.hklaw.com/en/insights/publications/2026/06/tracking-sb-79-implementation-before-the-train-leaves-the-station.
[7] Source: https://www.loeb.com/en/insights/publications/2026/01/2025-california-housing-legislative-update-updated-jan-8-2026.
