Major change for California housing that will see cheap homes spring up across state

California is overhauling the way it funds affordable housing in a bid to speed up construction, lower costs and get more cheaper homes built across the state.

Gov. Gavin Newsom on Monday signed Assembly Bill 179, a budget trailer bill that revamps California’s affordable housing financing system by cutting bureaucracy and simplifying how developers apply for state funding.

State officials say the changes will help affordable housing projects move from the drawing board to construction more quickly while making better use of limited public dollars.

“We’re streamlining bureaucracy, reorganizing a construct around a simple one-stop application around financing-focusing on real accountability at the local level, driving accountability at the state level with fundamental land use reforms, and time to develop reforms,” Newsom said.

The legislation creates what state officials describe as a “one-stop shop” financing system, reducing duplicative reviews and speeding up the approval process for affordable housing developments.

It also encourages local governments to reduce development impact fees, which can add tens of thousands of dollars to the cost of building each home.

Supporters say those changes could cut construction costs by an estimated $60,000 to $70,000 per affordable housing unit, allowing the same amount of state funding to finance significantly more homes.

“We’re going to make it much more easier to build, and we’re going to get the money out the door faster,” said state Sen. Jesse Arreguín (D-Oakland).

The new law also includes a $100 million Disaster Rebuilding Fund to help homeowners rebuild after natural disasters, extends $900 million in homelessness grants for local governments and provides an additional $700 million for affordable multifamily housing through tax credits and housing programs.

The measure comes as California continues to grapple with one of the nation’s most expensive housing markets.

Years of limited home construction, high land prices and rising development costs have contributed to a severe housing shortage, leaving many families struggling to afford a place to live.

According to the California Association of Realtors, the statewide median price of an existing single-family home has remained above $900,000 in recent years, while affordability has hovered near historic lows, putting homeownership out of reach for many residents.

Newsom argued California has already begun making progress in addressing the crisis, pointing to state figures showing residential construction has increased by 59% since 2019, from about 70,000 homes built in 2018 to roughly 111,000 in 2024.

“We have proof points that suggest differently. Fifty-nine percent increase in housing construction, 57% decrease in the time to getting permits. That’s real. That’s the receipt,” Newsom said.

The governor’s office also said reforms passed since 2019 have reduced the average time from development application to entitlement by 57%, from 160 days to 68 days, while more than 682,000 homes have been built statewide over the past five years.

The legislation passed with broad bipartisan backing, receiving just 18 “no” votes across both chambers of the Legislature.

Supporters acknowledge the new law will not solve California’s housing crisis overnight, but say streamlining financing and reducing construction costs should allow more affordable housing developments to break ground sooner and help increase the supply of lower-cost homes across the state.

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