California’s Housing Marathon: Why Housing Providers Must Stay Engaged

In California, housing providers face a marathon of ever-shifting rules—while the finish line keeps moving further away. Over 60 new housing laws passed in 2024, yet the state still falls short of its housing goals.

The Slow Burn of Reform

California’s housing crisis has often been described as a complicated maze of rules and regulations, but for housing providers, it feels more like a marathon where the finish line keeps moving and there is no clear end in sight. There is a persistent impulse to regulate the entire housing industry, often without grounding new policies in facts or reliable data. Housing providers, who deliver most of the state’s rental housing, are too often left out of the discussion when solutions are being crafted. In 2024, researchers tracked more than 215 housing bills in Sacramento, and more than 60 ultimately became law [1][2]. Yet despite this wave of legislation, housing production remains far short of what the state requires to close the housing gap. Many of the new laws, while well-intentioned, add layers of compliance that make it harder for housing providers to deliver new homes or reinvest in existing housing.

The gap between intent and results is striking. A 2025 analysis by YIMBY Law concluded that several recent state housing laws have had “limited to no impact” on the delivery of new homes [3]. For housing providers and investors, the lesson is clear: compliance obligations have grown faster than the housing pipeline.

California recently attempted to tackle one of its most significant obstacles: the California Environmental Quality Act (CEQA). Governor Gavin Newsom signed AB 130 and SB 131 into law in June 2025, introducing expanded exemptions for infill housing, climate resilience projects, and faster review timelines. The measures took effect on July 1, 2025 [4].

In practice, however, CEQA remains a frequent tool for neighborhood opposition groups and special interests to stall projects through litigation. Industry observers note that developers often set aside significant sums to prepare for potential CEQA lawsuits, adding cost and uncertainty before construction even begins. While the recent reforms represent progress, they do not eliminate opportunities for abuse. CEQA is still used as a form of lawfare to tie projects up in court and discourage new housing. More comprehensive reform is needed to ensure that the law serves its original purpose, protecting the environment, without being misused to block responsible development.

Even with repeated promises from state and local leaders to prioritize recovery and “cut the red tape,” progress on the ground has been slow. After the devastating January 2025 Los Angeles wildfires, more than 800 homeowners applied for rebuilding permits by early July, but fewer than 200 had been approved. Average review times in the City of Los Angeles were around 55 days, with even longer waits reported in unincorporated areas [5]. For housing providers, these delays translated into higher costs, insurance complications, and months of lost revenue. For residents and communities, the slow pace has added a heavy psychological toll, compounding the trauma of displacement.

Adding to the challenge are construction costs that remain significantly higher in California than in other states. RAND research shows that per-square-foot construction costs in California are more than twice those in Texas, with project timelines also considerably longer [6]. Mandated wages, local impact fees, and strict building codes all contribute to an environment where housing is difficult and expensive to produce.

Local permitting processes play a major role in slowing housing production. While state leaders often look outward for solutions, there has been little self-assessment at the municipal level about how cities can make development easier. In Long Beach, for example, the site plan review process for a 10-unit apartment building is the same as it is for a 110-unit building. By contrast, in Los Angeles, projects with fewer than 50 units are not subject to a full site plan review. It is unusual to highlight Los Angeles as the more efficient jurisdiction, but in this instance, it demonstrates that municipalities can adjust requirements in ways that better reflect the scale of a project [7].

Housing providers feel the cost of these inefficiencies directly through longer timelines, higher financing expenses, and missed opportunities. To address this, AACSC is working with a roundtable of industry experts to identify practical reforms that will make the development process in Long Beach more predictable, more efficient, and better aligned with the city’s housing goals.

Case Study: Long Beach and “The 101”

Long Beach provides a clear example of how state and local priorities can align with execution. In July 2025, the city broke ground on “The 101,” a $93 million supportive housing development in the South Wrigley neighborhood. Developed by Jamboree Housing, the project will deliver 52 units of permanent supportive housing along with on-site mental health and life-skills services [8].

The financing is complex but instructive. It combines state funding, tax credit equity, a construction loan, permanent financing, and 51 project-based vouchers committed by the Long Beach Housing Authority [8]. For housing providers, “The 101” demonstrates how layered financing and voucher commitments can create opportunities even in difficult markets.

As part of its Long Beach BUILD Initiative, the city also introduced a “shot clock” to reduce permitting delays for housing development. City leaders acknowledged that backlogs in the Building and Safety Bureau were stalling housing delivery. In response, they launched a program of software upgrades, staffing adjustments, and clear deadlines for permit reviews to keep projects moving [9]. Although originally focused on affordable housing, the effort has since broadened and provides housing providers with more predictable timelines across the board.

In addition, Long Beach has expanded its inclusionary housing requirements. By 2027, new rental developments with ten or more homes must dedicate up to 12 percent of units as affordable, while ownership projects must set aside 10 percent [10]. Although inclusionary rules often raise concerns among developers, early results suggest that production has continued in areas where these requirements apply.

For AACSC members, the Long Beach experience highlights how strong public-private partnerships, creative financing, and pragmatic local policies can align to support housing production. AACSC has been a consistent advocate in these discussions, ensuring that the voice of housing providers is heard as the city shapes its policies for the future.

The Systemic Bottlenecks

Despite positive examples, significant challenges continue to slow housing production across California. One of the most significant barriers is financing complexity. The Terner Center for Housing Innovation at UC Berkeley estimates that each additional public funding source for an affordable housing project adds approximately four months of delay and more than twenty thousand dollars in cost per unit [11]. Since most projects depend on multiple sources of public funding, the cumulative impact is longer timelines, higher costs, and fewer units being completed.

Regulatory timelines also remain a significant obstacle in many cities. In San Francisco, the combined entitlement and permitting process for multifamily housing projects can take well over a year, with even single-family homes sometimes facing more than two years of review [12]. These prolonged processes translate directly into higher holding costs and greater financial risk for housing providers.

Local politics can also undermine state efforts at reform. In August 2025, the Los Angeles City Council voted eight to five to formally oppose Senate Bill 79. This proposal would have overridden local zoning rules to require higher-density housing near transit. The vote highlighted the continuing conflict between state housing mandates and local political control, leaving housing providers facing inconsistent and often conflicting rules across jurisdictions [13].

Even after projects secure approvals, utility delays can present another obstacle. In the Bay Area, homeowners and builders have reported waiting many months, and in some cases up to a year, for Pacific Gas and Electric to complete power connections for new accessory dwelling units. Although the backlog improved in late 2024, these delays remain a barrier that raises costs and discourages investment in one of the few housing types that can be delivered relatively quickly [14].

For housing providers, these bottlenecks in financing, permitting, zoning, and utility coordination create a system that resists production at nearly every stage. Until reforms focus not only on legislation but also on how policies are carried out on the ground, California will continue to struggle with housing shortages.

Why This Matters for Housing Providers and Policymakers

These obstacles are not theoretical. They directly shape how housing providers manage their properties, reinvest in older buildings, and plan future acquisitions. Every delay increases carrying costs, reduces returns, and complicates financing. The uncertainty created by unpredictable rules makes lenders more cautious, which discourages long-term investment in California markets.

For smaller housing providers, the growing weight of compliance costs can prevent reinvestment in older housing stock. These owners often face the most significant pressure, as the cost of meeting new mandates can push them toward an early exit from the market. In many cases, properties end up consolidated into larger corporate portfolios rather than remaining in the hands of local owners.

For larger investors, the challenge is different but no less severe. Protracted approval timelines and fragmented financing structures increase risk to the point where capital often flows to regions with more predictable rules. Investors go where the path to delivering new housing is more straightforward. When California cities create uncertainty, they inadvertently push investment elsewhere, leaving local markets short of the new supply they need.

For emerging investors and those working to scale their portfolios, the environment is challenging. When regulations constantly shift and the rules of the game are unclear, the risks rise while the rewards diminish. This dynamic will ultimately mean fewer players entering the housing market, reduced competition, and less reinvestment in communities that need it most.

A Blueprint for Change

Southern California faces one of the most severe housing shortages in the nation. Rising inflation, limited supply, and regulatory bottlenecks continue to weigh on both residents and housing providers. Across Los Angeles County’s 88 incorporated cities and throughout the state, governments are searching for strategies that balance growth, affordability, and sustainability. The Apartment Association, California Southern Cities (AACSC), has outlined a set of reforms that state, county, and local governments can implement to remove barriers and support housing production.

Enforce Accountability

Policymakers must ensure that state housing laws come with enforceable timelines and real consequences for jurisdictions that delay approvals. Without accountability, reforms remain symbolic and fail to deliver new homes. Governments should also measure outcomes honestly and revise policies that do not increase supply.

Streamline Permitting and Approvals

Cities can reduce costs and improve predictability by adopting by-right approvals for projects that comply with existing zoning, offering over-the-counter reviews for pre-approved designs, and allowing parallel third-party plan checks authorized by municipalities. Licensed architects should be permitted to certify compliance with building codes, which would cut duplication and free up city staff to focus on more complex projects. For small-scale infill projects, such as those with ten units or fewer, cities should align with Senate Bill 10 and remove unnecessary reviews that stall neighborhood-level development.

Reform Local Fees

Local governments must reform their fee structures so that impact fees are tied directly to the number of units being built. A proportional and transparent approach would ease the burden on small and mid-sized projects that currently face the same fee schedules as large-scale developments. Although California has taken steps toward greater transparency through state laws such as AB 602, which requires jurisdictions to publish itemized fee schedules, many cities continue to impose costs that are out of proportion to project size. The result is that smaller projects often become financially unworkable, even though they are exactly the kinds of infill developments communities need most. A fairer system would not only make more housing financially feasible but would also give cities the resources they need to fund infrastructure and services in a way that matches real growth.

Support Innovation

Governments should embrace innovation in both construction and permitting. Prefabrication, modular housing, and technology-driven review systems can reduce costs and shorten project timelines while maintaining high standards of safety and sustainability. Equally important, materials or building methods that are already approved in one California city should be recognized automatically in others, so long as they meet state code and have been accepted by more than one jurisdiction. This would eliminate costly duplication and provide housing providers with greater certainty as they move projects across city boundaries. Environmental recycling programs also need to be modernized. Instead of collecting large up-front fees that are held for years, jurisdictions should reward proven compliance with multi-year exemptions, allowing builders with strong track records to operate more efficiently while still protecting environmental goals.

Incentivize Mixed-Income and Workforce Housing

State and local policies should expand housing incentives beyond programs aimed only at very low-income households. Moderate- and middle-income residents, often earning up to 150 percent of the area median income, are being priced out of the very communities they sustain. This group includes teachers, nurses, medical technicians, police officers, and other first responders. They are the backbone of local economies and essential to public health, education, and safety, yet they frequently cannot afford to live near their workplaces.

Cities should address this gap by providing meaningful incentives for workforce housing. Policies such as reduced parking requirements, more flexible design standards, and by-right approvals for mid-rise housing of five to seven stories would make projects serving these households more financially viable. Supporting housing for this segment of the population not only strengthens neighborhoods but also ensures that communities remain livable, balanced, and connected to the very people who provide vital services every day.

Adopt a Regional Housing Strategy

The housing crisis is too large for piecemeal solutions. Local governments must coordinate across the 88 cities of Los Angeles County and throughout Southern California to create a consistent regional framework. By aligning policies, streamlining approvals, and reducing costs, governments can expand housing opportunities at every income level and create a more sustainable housing market.

AACSC’s Commitment

California faces a housing shortage measured in the millions. A widely cited McKinsey analysis estimated a shortfall of 3.5 million homes by 2025, while more recent planning goals aim for 2.5 million additional homes by 2030 [15][16]. Without meaningful reform, the gap will continue to grow.

Examples like Long Beach show that when priorities align and execution is consistent, real progress is possible. AACSC will continue to push for practical, results-driven policies that give housing providers the clarity and stability they need to invest with confidence. With your involvement, we can ensure that California’s housing future is defined by opportunity, not obstacles.

Endnotes

1. Terner Center for Housing Innovation, “2024 Legislative Session Preview,” Jan. 2024.
2. Terner Center for Housing Innovation, “California Housing Laws That Go Into Effect in 2025,” Jan. 2025.
3. CalMatters, reporting on YIMBY Law’s 2025 assessment of post-2021 housing laws, July 2025.
4. Association of Bay Area Governments (ABAG), summary of AB 130 and SB 131 reforms, June 2025.
5. Vox, “Why it is taking Los Angeles so long to rebuild after the wildfires,” July 2025.
6. RAND Corporation, “Cost to Build Multifamily Housing in California More Than Twice as High as in Texas,” Apr. 2025.
7. San Francisco Planning Department, “Permit Timeframes Dashboard,” accessed Aug. 2025.
8. California Construction News, “Long Beach Breaks Ground on The 101,” July 2025.
9. Long Beach Post, “Construction permitting delays endanger the city’s recovery, but a new initiative could offer solutions,” June 2021.
10. City of Long Beach, “Inclusionary Housing Policy,” updated 2025.
11. Terner Center for Housing Innovation, “California’s Fragmented Affordable Housing Finance System Adds Costs and Delays,” May 2025.
12. San Francisco Planning Department, “Permit Timeframes Dashboard,” accessed Aug. 2025.
13. Westside Today, “Los Angeles City Council Opposes Statewide Density Bill SB 79,” Aug. 2025.
14. San Francisco Chronicle, “Homeowners Blame PG&E for ADU Delays,” June 2024.
15. McKinsey Global Institute, “Closing California’s Housing Gap,” 2016.
16. San Francisco Chronicle, “California’s Housing Goals Updated to 2.5 Million by 2030,” 2024.