Three Major Hurdles to Fixing California’s Housing Crisis

Earlier this summer, Governor Gavin Newsom signed a $214.8 billion state budget that included $2 billion in new spending to address California’s housing and homelessness crisis. While Governor Newsom and the state legislature should be applauded for their efforts, we must also acknowledge that California cannot spend its way out of the housing affordability crisis that has engulfed the state.

There are no quick fixes when it comes to alleviating the state’s housing woes. California’s housing crisis is the result of decades of legislative and regulatory actions at both the state and local levels which have constrained, and in many instances outright stopped new home construction. If measurable progress on housing affordability is to occur, there are several key legal hurdles which must be overcome.

First and foremost, there needs to be a serious effort by Governor Newsom and the state legislature to mend – not end – the California Environmental Quality Act (CEQA). Signed into law in 1970, CEQA was created to ensure that certain environmental protections were in place with new development projects, such as housing. Despite its original intent, CEQA has evolved from a tool into a trap, ensnaring practically all new housing, regardless of how locally necessary or environmentally friendly.  

From senior retirement communities to homeless shelters, hundreds of CEQA lawsuits have crushed sorely needed new housing proposals. CEQA abuse has become so widespread that based on a study by the law firm Holland & Knight, between 2012 – 2015, close to 14,000 housing units in the Southern California region (minus San Diego) were targeted by CEQA lawsuits. 

Along with the need to reform CEQA, the state must also make significant changes to prevailing wage requirements for new home construction. Prevailing wage is essentially the average hourly pay for construction work within a specific geographic region, and it applies to a wide variety of trades including carpenters, electricians, and plumbers. 

Under state law, home builders are required to pay prevailing wage on most low-income housing developments receiving public financing, thus leading to a substantial increase in costs. A report from the California Homebuilding Foundation found that prevailing wage requirements can mean as much as a 37 percent increase in construction costs, which equates to about $84,000 for a typical new home. 

To avoid adding additional hurdles to housing growth, it’s imperative that any new prevailing wage requirement fully recognizes, with metrics, the economic realities of each geographic region throughout the state.

Finally, there needs to be an increased opposition against overly restrictive local land-use laws often adopted as a result of pressure by residents intent on stopping new housing. According to the California Building Industry Association, approximately two-thirds of cities and counties in the state’s coastal metropolitan areas have adopted growth control laws which severely limit new housing opportunities. 

In those cases where new housing developments are approved, residents will often seek to curtail new home construction by placing “slow growth” or “no growth” measures on the ballot. Cities including Costa Mesa, Thousand Oaks, and Redondo Beach are among several Southern California municipalities that have passed voter-approved initiatives which effectively limit new housing.

It’s because of these types of legal impediments that the Building Industry Association of Southern California formed the nonprofit Building Industry Legal Defense Foundation, which has worked tirelessly to protect the home building industry from laws and regulations aimed at preventing new housing.

There is only one way out of California’s housing crisis, and that’s to ensure that home builders can do business in a legislative and regulatory environment where actual construction can take place. 

Jeff Montejano serves as CEO of the Building Industry Association of Southern California. Headquartered in Irvine, the Building Industry Association of Southern California is a leading advocate for thousands of building industry leaders who are committed to a better future for California by building communities, creating jobs and ensuring housing opportunities for everyone.

This article was originally published by Fox and Hounds Daily


  1. So, the problem can be narrowed down to the common denominator, and that would be; California’s legislature, Gavin Newsom, and Democrats.
    Let’s forget the morons who elected them!

  2. Hurdle 1: The Democrat Party
    Hurdle 2: The Democrat Party
    Hurdle 3: The Democrat Party

  3. I live in the Palm Springs area. A group has been trying to build 8500 new homes out in the desert. No game trails or anything else just desert. They have been trying for TWENTY YEARS to get an approval but were turned down again. The enviro wackos are screaming about something being “endangered”. And it goes on and on so just keep voting for people like Pretty Boy Newsom, Ruiz, Pelosi, et al. And they wonder why we have a housing shortage, rats and typhoid fever.

    • Anziani,

      You have nailed the number one issue which is we badly need land use reform. All other issues become secondary if there is no land allowed for building housing. Unfortunately, as pointed out on this site, only 5% of CA is allowed to be built on even as millions more newcomers, both legal and illegal arrive.

  4. Problem, not enough housing for the amount of people in California—
    Solution , send the OVER 5 MILLION illegals home —–
    Result No more crisis .
    Building restrictions result in YOUR Property being worth more money and when you get old it’s better than a savings account as it should be worth tens of thousands if not hundreds of thousands of dollars more that what you bought it for .
    That balance has worked fine for a Loooooonnnggg time , it only became a problem when we got invaded by foreign nationals from the entire world.
    From the sword of—–

  5. I will remind you that this is not about land, it is about Agenda 21. It is a global mandate through this agreement, which California is following seriously as good liberal idiots, that we should have density, not housing. And we should also have democrat population to vote in all the stupid left ideas they are spouting, also Agenda 21.
    I know it is hard to believe, but if you look it up, it is as true to form as the Alinsky rules the Dems are also following. But HUSH IS THE WORD — the Dems will not admit to any Agenda 21 if you ask them.

  6. The homeless crisis is big business. That’s why it will grow larger and not be solved. In California the homeless and illegals now have more rights and protections than tax payers

Speak Your Mind