California is pushing for more publicly subsidized housing, or what state leaders and lawmakers call “social housing,” with a new law approved by Gov. Gavin Newsom Oct. 7 that will direct the state’s housing department to study and devise a plan to scale up such housing stock statewide.
Senate Bill 555, authored by Sen. Aisha Wahab (D-Fremont), directs California’s Department of Housing and Community Development to begin a study by the end of 2026, analyzing ways to streamline affordable housing for middle- and lower-income families in California.
“Today, more than one-quarter of California renters are severely rent burdened, spending over one-half of their income on rent. Rent burden hits lower-income residents hardest of all, and the unaffordability of rents is a major driver of homelessness. And middle-income residents are now the fastest-growing group of cost-burdened renters. We’ve studied the problem thoroughly, but we require more study of the possible solutions,” Ms. Wahab said in a recent Assembly analysis of the bill.
Various lawmakers in the same analysis said there are currently an estimated 480,000 subsidized housing units available for rent in California, which is about 3.5 percent of the state’s housing stock. Generally, they said, most were built using a mix of public and private financing and are for those who earn 80 percent or less of the median income in one’s county.
The new law seeks to help the state meet its affordable housing production goals, which are set forth under an eight-year plan for each region, of which a combined 2.5 million homes must be planned for by October 2029. Nearly 1.5 million of such housing needs to be for those earning what’s considered moderate income, low income, or very low income.
Under the new law, the state’s housing department is also tasked with identifying any constraints or obstacles in meeting their goal, examining existing social housing models, and analyzing the need for tenant protections for such housing as well as any federal funding, resources, or policy initiatives that could help advance the cause.
State housing officials will additionally analyze potential local economic benefits that could result from using local unions in the construction of the proposed social housing. They’re also authorized to remove any “constraints” on public land for such goals, if such doesn’t require legislative action, and to identify any revenue streams for a social housing fund.
Examples of social housing models outside of the United States, according to lawmakers, include those in Vienna, Austria, where higher-income households pay market rate rents which subsidize below-market rents for lower-earning families. They said the method is referred to as “cross-subsidization,” which makes up for around 40 percent of the housing stock in the European city.
An example of cross-subsidization in California, according to lawmakers, is under what’s known as California’s density bonus law, where residential developers are incentivized to include more affordable housing in their projects to receive fewer limitations on the density of those developments.
Those in support of the bill included pro-labor, teacher, transit, tenant protections, and pro-housing groups.
Those opposed were one city, Huntington Beach, and the California Association of Realtors, a statewide real-estate trade organization.
In a recent Senate analysis of the bill, the association argued against it citing concerns it would prevent the construction of what they called naturally occurring housing stock, since the bill largely aims to incentivize the building of below-market-rate homes.
“The bill would put home ownership opportunities further out of reach for lower income communities by reducing naturally occurring affordable housing stock,” the association wrote.
