This September, Governor Gavin Newsom signed into law a package of controversial housing bills which aim to address California’s housing shortage and affordability issues by encouraging increased density. Senate Bills 8, 9 & 10 all passed with bipartisan support, and will have direct implications for our local housing market. Let’s take a quick bird’s eye view at what each bill will do:
SB 8 – Extending the Housing Crisis Act
SB 8 extends the provisions of the Housing Crisis Act of 2019 through 2030. The Housing Crisis Act of 2019, which was scheduled to expire in 2025, accelerates the approval process for housing projects, curtails local governments’ ability to decrease density, and limits fee increases on housing applications, among other key accountability provisions.
SB 9 – California Housing Opportunity and More Efficiency (HOME) Act
The most controversial bill of the package, SB 9 requires cities to approve two units or a two unit subdivision on any parcel zoned for single-family residential development, provided it is within an urbanized area and not located in a hazard zone for fires, earthquakes or floods, and not located in a historical district.
This bill has significant implications for real estate investment, as it opens the door for the construction of additional units on most single-family residential properties, whether that be through conversion to a duplex, or splitting one lot into two. This is a VERY interesting development in the housing market, but there is still a lot to be learned about how the bill will be handled by local governments. Needless to say, we will be monitoring the situation closely. Stay tuned!
SB 10 – Streamlined Zoning for Higher Density Development
SB 10 creates a voluntary process for local governments to access a streamlined zoning process for new multi-unit housing near transit or in urban infill areas, with up to 10 units per parcel. This will make it easier for local governments to “upzone” (allow for denser development) along key transit corridors.
These three bills are representative of a major push to increase housing production in California. And while anything promoting increased density will have its detractors, especially in suburban areas, fundamental change in how California approaches housing development has been long overdue. That being said – execution is key. It will be interesting to see how this new legislation plays out in the coming years.