2026 California Legislative Preview

After enacting several high-profile housing bills in 2025, lawmakers have shown no indication that 2026 will be any less eventful. The legislature has shifted from its focus on land use regulations to reducing construction costs, streamlining housing production, and addressing home insurance challenges. Moreover, the governor’s proposed 2026-27 budget and housing agency reorganization plan set the stage for a potentially dynamic legislative cycle.

In terms of leadership, State Senator Monique Limón assumed the role of Senate president pro tempore on January 6. She appointed Senator Jesse Arreguín as chair of the Housing Committee, which is responsible for reviewing bills on housing, including for funding programs, building codes and standards, land use regulations, and Housing Elements. For the California State Assembly, Assemblymember Robert Rivas remains the speaker, and Assemblymember Matt Haney continues as chair of the Committee on Housing and Community Development. As gubernatorial candidates prepare for a June primary, housing affordability continues to be a key election issue.^[1]

This preview summarizes key housing policy themes that we will be following this year.

Funding for Affordable Housing

In January 2026, the governor’s proposed 2026-27 budget projected a deficit and did not include funds for many of the state’s affordable housing and homelessness programs, including investments in new multifamily affordable housing and to support farmworker housing and housing preservation.^[2] The State’s Homeless Housing, Assistance, and Prevention Grant Program (HHAP)—critical for supporting local efforts to address homelessness—was only allocated the $500 million for Round 7 that was promised, but not appropriated, in the 2025-2026 State budget. That is half of what it received in Round 6.^[3] HHAP is the only state funding source that provides flexible funding to localities and Continuums of Care (CoCs) to address homelessness. The governor’s May Revision will offer a clearer picture of the State’s spending and revenue, with the deadline to enact the final budget being June 15.

At the same time, legislative efforts aim to expand funding mechanisms for affordable housing. Assembly Bill (AB) 2020 (Gabriel) would allow affordable housing developers to move project reserves across their portfolios to stabilize projects under extreme financial pressure.

Additionally, the proposed budget trailer bill provides more detailed proposals for the governor’s housing agency reorganization plan. The Business, Consumer Services, and Housing Agency will be divided into the California Housing and Homelessness Agency (CHHA) and the Business and Consumer Services Agency.^[4] A newly formed Housing Development and Finance Committee (HDFC) will oversee the distribution of affordable housing resources currently managed by the Department of Housing and Community Development (HCD) and the California Housing Finance Agency.

Under this year’s trailer bill proposals, at least half of private activity bonds for rental projects would be set aside and automatically awarded to HDFC-funded projects to ensure that state-funded projects do not face delays while waiting to be awarded tax credits and bonds. HDFC would also manage the housing capital portion of the Affordable Housing and Sustainable Communities Program.^[5]

These efforts are especially important because they help streamline the state’s fragmented affordable housing delivery system.^[6] Legislators have proposed a few bills that would increase the scope of CHHA’s work. AB 1899 (Caloza) would create an office of youth homelessness prevention; AB 1924 (Gabriel) would require CHHA to develop a statewide homelessness prevention strategy; and Senate Bill (SB) 1091 (Caballero) would establish a community anti-displacement and preservation program.

Reducing Development Costs

Building on years of reforms to land use regulations and permitting, the legislature has signaled a renewed interest in reducing the cost of development. The Assembly Select Committee on Housing Finance and Affordability and the Assembly Select Committee on Housing Construction Innovation were both formed to examine legislative solutions to rising construction costs. To inform these efforts, a new Terner Center report outlines potential policy interventions to scale construction innovation. A number of Select Committee members have introduced spot bills, or placeholder bills, to implement these recommendations, such as AB 1815 (Wicks), which would determine the standards for factory-built housing.

Several other bills developed outside of the Select Committees also seek to address development costs. AB 2074 (Haney) would create a new, lower-cost financing option for high-rise residential developments near major regional transit hubs through a new revolving loan fund. These projects would be subject to specific labor standards and could also access streamlined approvals. SB 328 (Grayson) would limit fees charged by the State for hazardous waste remediation to $100,000 for residential infill projects and $250,000 for new residential projects that meet certain conditions. AB 2748 (Quirk-Silva) would exempt affordable housing developments from being electric-vehicle-charger-ready until 2037. SB 1036 (Grayson) would require that all jurisdictions provide impact fee credits or a reduced fee when a project is redeveloping a site with prior similar usage. Additionally, the bill would require that impact fees be based on the net impact a project has on public facilities. Terner Center research has demonstrated that overly large fees can influence the cost to construct both market-rate and affordable housing.^[7] Relatedly, SB 1117 (Cervantes) changes how jurisdictions calculate impact fees for accessory dwelling units (ADUs), only allowing fees for square footage above 750 square feet.

AB 2089 (Ward) would expand the existing welfare property tax exemption for nonprofit affordable housing developers established by SB 84 (2023, Ward) to properties that risk losing the exemption due to the loss of a nonprofit managing general partner. SB 1415 (Arreguín) would provide a partial welfare property tax exemption to certain moderate-income housing.

Legislators are also interested in revising building code requirements or processes as a way to lower costs. AB 1070 (Ward) would require the formation of a working group to study building standards that would allow residential developments between three and 10 units to follow residential building codes rather than commercial codes. AB 2252 (Lee), a spot bill, would reform the state building code by allowing residential buildings with four or more stories to be built with a single staircase. AB 2044 (Petrie-Norris) would require that proposed building standards include a completed estimate of the cost of compliance before the California Building Standards Commission can approve or adopt them.

Streamlining

The legislature continues to explore reducing local government delays in entitlement and permitting processes, standardizing applications, and simplifying building inspections. SB 1258 (Wiener) would allow urban infill multifamily housing projects proposed on hazardous sites to access streamlined approvals if the relevant state agency has determined that the site is suitable for residential use prior to issuance of a certificate of occupancy.

AB 1621 (Wilson) would prohibit local agencies from requesting more than two plan checks for a permit unless there are written findings of a health or safety risk. It would also shorten the time local governments have to resolve permit appeals to 30 business days for projects with 25 units or fewer and 45 business days for larger projects.

SB 1014 (Grayson) would require localities to provide a list of all required onsite or offsite improvements and cost estimates for these improvements within 30 days of receipt of a preliminary application or an application for a housing development project. Local or state agencies would be prohibited from requiring onsite improvements that were not disclosed to the developer within 30 days of submitting an application for a post-entitlement phase permit.

AB 748 (Harabedian) would require local agencies to develop preapproved housing plan programs and post these plans on the agency website. Local agencies would also have to approve or deny ministerial applications that use preapproved plans and meet other conditions within 30 days. Similarly, SB 1383 (Arreguín) would require agencies to publish examples of completed, approved post-entitlement phase permit applications for junior accessory dwelling units, and require agencies to notify applicants of whether their application is complete within 15 days of receipt.

AB 1294 (Haney) would create a standardized application for housing entitlements and rules for when an application must be “deemed complete” by local governments. AB 1738 (Carrillo) would require cities and counties to allow homeowners in a single- or two-family dwelling unit to request remote building inspections for certain structural components.

AB 1740 (Zbur) would allow localities to circumvent California Coastal Commission approvals for certain housing and transportation projects if they meet the designation of an urban, multimodal community. Cities could designate themselves as this if they meet certain conditions, such as having at least one high-quality transit corridor or transit priority area in the city and having plans with goals to decrease greenhouse gas emissions.

To streamline the development of missing middle housing—such as ADUs, townhomes, and duplexes—AB 1751 (Quirk-Silva) proposes that local agencies must ministerially consider applications for townhome projects and their associated parcel map, tentative map, or final map, if the project meets all requirements. This would exempt these types of development from the California Environmental Quality Act (CEQA).

AB 2552 (Ávila Farías) would specify that a contribution to the Transit-Oriented Development Implementation Fund will count as a complete mitigation measure for CEQA transportation impacts.

Bills also add clarifying language to prior legislation, including SB 908 (Wiener), a spot bill intended to address ambiguities about where SB 79 (2025, Wiener) applies, as well as adding  certain San Francisco ferry terminals to the transit-oriented development provisions. SB 79 set height and density standards for housing near high-frequency rail stations and bus rapid transit. AB 2118 (Hoover) would revise AB 2011 (2022) by ensuring objective standards (i.e., design, subdivision, zoning) do not prohibit or limit mixed-use development. The bill would also specify that by-right projects, including state or local permits, are not subject to CEQA review. AB 1710 (Carrillo) would expand SB 330’s (2019, Skinner) limitations on the use of subjective judgment by local officials to include materials requirements, post-entitlement permit standards, and other requirements adopted by public agencies.

Insurance and Climate Resilience

Following climate-related events such as the devastating Eaton and Palisades wildfires, California homeowners continue to face increasing home insurance premiums and fewer insurer options.^[8] Proposed legislation seeks to address these barriers and strengthen homeowner protections.

SB 1076 (Pérez) would prohibit insurers from refusing to offer, sell, or renew a residential property insurance policy for applicants whose property meets wildfire-safety standards. SB 1301 (Allen) would mandate that insurers provide a notice of and rationale for nonrenewal six months in advance, and would prohibit insurers from refusing to issue or renew based on certain claims. Moreover, AB 1680 (Calderon) would expand coverage in the California Fair Access to Insurance Requirements (FAIR) Plan, among other changes. SB 894 (Allen) would create a statewide loan program to help homeowners finance wildfire safety upgrades.

Promoting Homeownership

Several bills seek to promote homeownership. AB 1406 (Ward) would double the current liquidated damages limits on homebuyer deposits for new condominiums, from 3 to 6 percent of the expected final purchase price. The higher deposit limit aims to reduce lender risk and financing costs for builders, which could encourage condominium development by better recognizing the true cost and risk of having buyers cancel contracts, bringing California pre-sale law closer to industry standards in other states.

SB 1116 (Caballero) would clean up SB 684 (Caballero, 2023) and SB 1123 (Caballero, 2024) by streamlining the development of smaller starter homes through subdivision changes, including allowing new parcels in multifamily zones to be as small as 480 square feet. The bill also eases design standards, such as excluding stairs and enclosed bicycle parking from the definition of “net habitable square feet.”

Lawmakers may also consider changes to construction defect liability law—a primary disincentive for developers and contractors to build condos^[9]—through AB 1903 (Wicks), a spot bill.

Ballot Initiatives

Lawmakers continue to push for an affordable housing bond on the November ballot: AB 736 (Wicks) and SB 417 (Cabaldon) are companion bills that would authorize a $10 billion bond measure to finance affordable housing programs, such as the Multifamily Housing Program; CalHOME; and the Joe Serna, Jr. Farmworker Housing Grant Program.

Other housing initiatives that might appear on the ballot include the Building an Affordable California Act, which would create deadlines for public agencies to complete environmental reviews after an application is deemed complete and narrow the criteria for a CEQA review of projects within certain categories.

Other pending ballot measures would restrict local transfer taxes, create property tax exemptions for homeowners over age 60, and establish a homeownership loan program for middle-income households.

The final set of ballot measures will likely be determined by late June through public signature-gathering initiatives or the legislature referral process.

Other Bills

Measures to encourage housing development include AB 956 (Quirk-Silva), which would allow homeowners to build up to two detached ADUs on their property. SB 1216 (Cabaldon) would establish a new pro-housing designation program to reward jurisdictions that meet certain housing production outcomes based on local affordability levels. This designation would allow these cities to modify some state housing requirements—for example, exempting themselves from SB 9 lot split requirements, as long as they allow ministerial approval of at least two units on eligible parcels.

Efforts to expand tenant protections and address affordability include SB 436 (Wahab), which extends the notice period for nonpayment of rent, known as “Notice to Pay or Quit,” from three business days to 14 business days. AB 1165 (Gipson) would require HCD to create finance plans and performance metrics to address homelessness and the housing affordability crisis. AB 801 (Bonta) would require financial institutions to meet the credit and financial service needs of under-resourced communities and encourage investments in affordable housing development, social housing, and other programs.

Lawmakers also seek to modify the state’s density bonus law (DBL). AB 939 (Schultz) aims to reduce vacancies in affordable, for-sale units by revising DBL to allow eligible nonprofit organizations to purchase for-sale units immediately, eliminating the 180-day waiting period after the issuance of a certificate of occupancy. Additional potential changes to DBL include AB 2433 (Alvarez), which would provide additional concessions or waivers for developers with deed-restricted, for-sale units for low- and moderate-income families and would require local agencies to inform developers if their project meets DBL standards.

The legislature continues to propose modifications to the Regional Housing Needs Assessment (RHNA) process. AB 1573 (Bryan) would include victims of domestic violence in RHNA target populations; AB 1567 (Ta) would allow planning agencies to count congregate care for the elderly for up to 15 percent of a jurisdiction’s RHNA obligation for any income category; AB 1623 (Davies) would require certain categories of student housing to count toward a jurisdiction’s lower-income RHNA allocation; and SB 457 (Becker) would clarify how cities can meet their state-mandated housing obligations by defining “in-kind services” as nonmonetary assistance that reduces development costs, such as providing predevelopment loans, land leases or donations, or other forms of assistance determined by HCD. Finally, SB 979 (Strickland) would allow local governments to challenge their RHNA allocations in court.

Endnotes

^[1] Baldassare, M., et al. (2026, February). “PPIC Statewide Survey: Californians and Their Government.” Public Policy Institute of California. Retrieved from: https://www.ppic.org/publication/ppic-statewide-survey-californians-and-their-government-february-2026/

^[2] California Budget and Policy Center. (2026, January). “First Look: Understanding the Governor’s Proposed 2026-27 California Budget.” Retrieved from: https://calbudgetcenter.org/resources/first-look-understanding-the-governors-proposed-2026-27-california-budget/#h-proposed-budget-includes-no-new-state-funding-for-affordable-housing

^[3] Davalos, M. (2024, December). “Protecting Progress: State Housing and Homelessness Funding Must Continue.” California Budget and Policy Center. Retrieved from: https://calbudgetcenter.org/resources/protecting-progress-state-housing-and-homelessness-funding-must-continue/

^[4] Shoemaker, D., et al. (2025, June 2). “Housing Opportunities: Governor’s Reorganization Plan to Create the California Housing and Homelessness Agency.” Terner Center for Housing Innovation, University of California, Berkeley. Retrieved from: https://ternercenter.berkeley.edu/research-and-policy/housing-opportunities-governors-reorganization-plan-to-create-the-california-housing-and-homelessness-agency/

^[5] California Budget and Policy Center. (2026, January).

^[6] Reid, C., & Tran, T. (2025, April). “Reducing Complexity in California’s Affordable Housing Finance System.” Retrieved from: https://ternercenter.berkeley.edu/blog/reducing-the-complexity-in-californias-affordable-housing-finance-system/

^[7] Reid, C., Corsiglia, L., & Metcalf, B. (2026, January). “Assessing the Cost of Impact Fees on Affordable Housing: An Analysis of Low-Income Housing Tax Credit Projects in California.” Tener Center for Housing Innovation, UC Berkeley. Retrieved from: https://ternercenter.berkeley.edu/blog/assessing-the-cost-of-impact-fees-on-affordable-housing-an-analysis-of-low-income-housing-tax-credit-projects-in-california/; and Raetz, H., Garcia, D., & Decker, N. (2019, August). “Residential Impact Fees in California: Current Practices and Policy Considerations to Improve Implementation of Fees Governed by the Mitigation Fee Act.” Terner Center for Housing Innovation, UC Berkeley. Retrieved from:  https://ternercenter.berkeley.edu/wp-content/uploads/pdfs/Residential_Impact_Fees_in_California_August_2019.pdf

^[8] Dong, H., et al. (2025, December). “The California Home Insurance Challenge in Eight Charts.” Terner Center for Housing Innovation, UC Berkeley. Retrieved from: https://ternercenter.berkeley.edu/blog/the-california-home-insurance-challenge-in-eight-charts/

^[9] Alameldin, M. & Karlinsky, S. (2024, July). “Construction Defect Liability in California: How Reform Could Increase Affordable Homeownership Opportunities.” Terner Center for Housing Innovation, UC Berkeley. Retrieved from: https://ternercenter.berkeley.edu/wp-content/uploads/2024/07/Construction-Defect-Liability-July-2024-Final.pdf

Acknowledgments

We are especially grateful to Muhammad Alameldin, Bill Fulton, Michael Lane, and Natalie Spievack for their thoughtful reviews of this commentary. Thanks also to the following Terner Center colleagues for their contributions: Ben Metcalf, Sarah Karlinsky, and Carolina Reid.

Special thanks to the Chan Zuckerberg Initiative, the Heising-Simons Foundation, and the David and Lucile Packard Foundation for their support of the Terner Center’s policy work.

This research does not represent the institutional views of UC Berkeley or of the Terner Center’s funders. Funders do not determine research findings or recommendations in Terner Center’s research and policy reports.