The SF Chronicle this week reported that “California is wildly off track to meet Newsom’s 2025 housing goal.” He’s not even close to reaching his ambitious goals.
For instance, the Chronicle notes, in 2017 as a candidate for Governor, Newsom said he would “lead the effort to develop the 3.5 million new housing units we need by 2025 because our solutions must be as bold as the problem is big.”
In fairness, that he has fallen short is not from lack of effort.
“Since taking office, Newsom has signed dozens of laws that aim to streamline the construction of new housing, approved billions of dollars for affordable housing through the state budget and created a new enforcement unit within his housing agency to crack down on cities that stonewall new housing,” the Chronicle explains.
Just 650,000 new homes were permitted between 2019 and 2023. That’s roughly 110,000 per year, although that number has been increasing from 70,000 in 2018 to 115,000 in 2023.
“The data shows the state is far short of the roughly 500,000 that would need to be approved each year to meet Newsom’s initial goal,” the Chronicle notes. “In 2022, when he was running for reelection, Newsom walked back the 3.5 million number when his administration set a new, less ambitious target: Cities would need to plan for 2.5 million new homes by 2030. So far, cities and counties have planned for 1.1 million new homes through their housing plans during Newsom’s tenure.”
Housing costs continue to rise in the meantime. In 2017, the median home price was $546K or, adjusted for inflation, it would be just shy of $700K, but the current median is around $868K.
While I’m sure that some slow growth advocates will point their fingers and say, see he can’t do it. Stop trying. But I don’t see any of this as particularly good news.
First of all, that’s not to defend Newsom, even though I give him as well as HCD and the AG’s office credit for trying.
The hope that attempting to end single-family housing in neighborhoods was doomed to fail in part because of the high construction costs. I don’t oppose efforts for less single-family housing and greater density, particularly near transit, but I think for now the biggest bang for the buck will be new housing that starts either in infill spots or on the edge of town.
Second, as I noted last week, the state is pushing for new housing with about forty percent of it being “affordable.” As I noted last week, that effectively will increase the top line, maybe even double it—it’s not realistic to get forty percent of units as affordable unless you can finance standalone affordable housing.
The state ended Redevelopment Agencies over a decade ago, which clearly has contributed to this problem. They have yet to find a funding mechanism for affordable housing since.
One option would be for the Governor to back a new RDA with an increment tax component. We have seen several efforts to introduce legislation including from our own Assemblymember Cecilia Aguiar-Curry. None of them have gained any traction.
We also saw a statewide initiative to lower the threshold on bond initiatives for affordable housing and homeless services to 55 percent—that fell short.
The effort I was most interested in was a housing bond that would have put about $20 billion into a general obligation bond measure for the production and preservation of affordable housing in all nine Bay Area counties. But it was withdrawn before going to the voters.
The decision was met with disappointment from housing advocates.
“We are deeply disappointed that this incredibly important affordable housing bond will not be moving forward,” said Ali Sapirman, Organizer and Policy Associate with the Housing Action Coalition. “The Bay Area suffers from one of the worst housing crises in the country, and has become deeply unaffordable for working and middle class people and families. We also face a severe homelessness crisis, with people in every Bay Area county living on the streets without access to shelter and safety. Regional Measure 4 would have created tens of thousands of affordable housing units, providing safe, stable housing for the Bay Area’s most vulnerable residents.”
Sapirman added, “Even amidst budget shortfalls, affordable housing must be a top priority, or we will see thousands in our community continue to face housing insecurity or be forced to leave the Bay Area entirely. Every Bay Area resident deserves an affordable place to live, and this housing bond would’ve helped make that happen.”
Senator Scott Wiener called the decision to delay the bond “extremely disappointing.”
“The Bay Area’s housing crisis is severe, and we desperately need significant investments to fund new affordable housing,” Senator Wiener said.
“In addition to affordable housing funding, we also need to shore up Bay Area public transportation systems to modernize and integrate them and to avoid devastating service cuts,” the Senator explained. “We’ve worked for several years toward a 2026 ballot measure to modernize, integrate, and fund public transportation, in addition to funding our roads.”
The Senator warned, “Without action, major Bay Area transit systems, including Muni, BART, and Caltrain, will begin cutting service in 2026. That would be devastating for the Bay Area and would lead to increased traffic congestion, increased carbon emissions, and a huge number of residents unable to get to work, school, or other important destinations. I’ll continue working with stakeholders across the region to bring forward a measure to provide sustainable transportation funding at the ballot in 2026.”
In short, I believe we need a funding mechanism to get to the number of affordable housing units we need—and, short of that, we are going to see an increased effort to use market rate to subsidize affordable housing at the more modest 15 percent rate.
For those perhaps hoping that this will take the pressure off local governments, I think not.
In fact, probably the opposite.
While Newsom will be termed out in 2026, it is seems unlikely that the next Governor will be less aggressive.
The state has been pressing home the need for local communities to do their part to ease the housing crisis. That likely increases the chances locally that we will see Measure J challenged, particularly if one or two of the next projects go down to defeat.
