Major Change Coming to California Housing Market

Newsweek

2 days ago

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
California, which many consider the epicenter of the U.S. housing affordability crisis, is set to finally create a state agency focused exclusively on housing issues.
Until now, it has been up to the Business, Consumer Services and Housing Agency (BCSH) to try to fix the Golden State's many issues related to housing—from its sky-high prices to the homelessness crisis. Its tasks range from licensing and regulating over 4 million professionals, businesses and financial services in California to boosting the availability of safe, affordable housing.
Now, following a proposal by Governor Gavin Newsom, the BCSH is set to be dissolved and replaced by two new agencies: one which will focus on housing, and one which will focus on business and everything else. This is due to take place on July 1, 2026.
How Will the New Agency Work?
According to Newsom's plan, the BCSH will be split into the California Housing and Homelessness Agency (CHHA) and the Business and Consumer Services Agency (BCSA). This reorganization, the governor said, will institutionalize housing, homelessness and affordability as "long-term priorities."
Construction workers build a home at a new housing development on July 1, 2025, in Hercules, California.
Construction workers build a home at a new housing development on July 1, 2025, in Hercules, California.These "complex and multifaceted" issues are "deserving of full and prioritized attention," Newsom said in a statement last week. "I am grateful that the legislature recognized the need for a new standalone agency dedicated to addressing these vexing issues that continue to face our state and nation, so that these issues will never fall into the shadows again. We have a moral imperative to continue this work and to ensure every Californian has a safe place to call home."
The BCSH said in a statement to Newsweek that since it was created in 2012, "the housing and homelessness, civil rights, and the consumer protection portfolios have greatly expanded to address urgent and emerging needs that impact all Californians."
The creation of two new agencies, it said, "will allow greater focus on ongoing reforms and improvements related to the state's housing and homelessness policies, civil rights, and consumer protection. This focus creates more opportunity for faster response and direction, leading to faster policy implementation."
Currently, California housing developers "must navigate a complex process to receive state investment, including grants, loans, bonds, and tax credits," the agency said. "The state has made efforts to simplify and harmonize this system, but more must be done."
The CHHA will include five different departments: the Housing Development and Finance Committee (HDFC), the Department of Housing and Community Development (HCD), the California Interagency Council on Homelessness (Cal ICH), the California Housing Finance Agency (CalHFA), and the Civil Rights Department (CRD).
These departments will be responsible for handling the state's housing programs, tackling homelessness in the state and partnering with other state agencies to address interconnected issues. BCSA, on the other hand, will be fully focused on serving California consumers and licensed professionals.
"This bold plan shows we are being more aggressive in prioritizing change for the better," said Tomiquia Moss, secretary of the BCSH. "This will enable us to better reach our goal of 2.5 million new homes by 2030, with one million of them being affordable housing. I'm extremely pleased the Governor is cementing his legacy by taking the Administration's accomplishments to the next level, providing the structure to make lasting and sustainable change."
Will This Help Fix California's Housing Crisis?
According to data from the U.S. Department of Housing and Urban Development (HUD), roughly 771,000 people experienced homelessness on a single night in the United States in 2024—up 18 percent from a year earlier.
The country's housing affordability crisis has likely played a role in recent increases: Since 2020, the number of people experiencing homelessness in the U.S. rose by 33 percent at the national level, according to HUD.
In 2024, 24 percent of the nation's entire homeless population was in California—one of the most expensive housing markets in the country. All other states, with the exception of New York, had rates below or at 5 percent.
According to the latest Redfin data, a typical home in California had a median sale price of $865,600 in June—nearly double the national median of $447,435.
Experts say that both the affordability and homelessness crises are closely related to the lack of available, affordable homes in the state. California is currently trying to reduce red tape and streamline the process for building new homes, including by revising its environmental law to make homes cheaper and quicker to construct.
Sarah Karlinsky, director of research and policy at the Terner Center for Housing Innovation of UC Berkeley, thinks that the creation of a new agency is a positive step toward fixing the state's housing troubles. She is particularly excited about the CHHA's Housing Development and Finance Committee.
"Right now, the funding that goes into building affordable housing [in California] is spread across two separate constitutional officers. You have the governor and you have the treasurer, and the governor has a certain set of funding and then the treasurer has, underneath the treasurer's office, two other really important pieces of funding: low-income housing tax credits and what's called tax-exempt bond debt," Karlinsky told Newsweek.
"Those are real significant funding sources for affordable housing production, which are governed by committees composed of different people within the government," she said. Under the changes introduced by the creation of an ad hoc agency, there would be one single committee governing all of the different funding sources.
Before Berkeley, Karlinsky used to be a developer of affordable housing herself. The process of applying for funding, she said, meant applying for six to seven different sources, wasting considerable time and money in the process. This should no longer happen under the new agency.
"The hope is [that], eventually, affordable housing developers can just go apply one time and get all the money they need and then go build their project," Karlinsky said. "And the reorganization that has happened took the first step towards making that happen."