Though opposition by entrenched interests is a leading cause of California’s — and the nation’s — housing shortage, another key player is cost, and it particularly hurts the production of affordable housing.
There is some activity in Sacramento to try to address the problem, and legislators are drawing on new research that underscores the challenges we face and the opportunities to improve the situation.
The report, produced by U.C. Berkeley’s Terner Center for Housing Innovation in partnership with the State Assembly’s Select Committee on Housing Construction Innovation, includes input from a wide range of sources, including unions, public officials, technology companies, developers (both affordable and market-rate), investors, and more. They identified seven areas for policy development that would boost the effort: building code reform, process reforms, reduction in financial risk and liability, aggregation of demand, workforce pipeline development, modification of state funding streams, and changing negative perceptions of risk.
The report puts an emphasis on the cost-saving opportunities in innovative practices, such as industrialized construction, which includes everything from using prefabricated building parts to AI and 3-D printing. Cost savings can be anywhere from 20 to 50 percent, which should be a game changer.
Assemblywoman Buffy Wicks (D-Oakland), chair of the new committee on housing innovation, said in a statement issued by her office, “We’re still building homes in a similar way to what we did a hundred years ago, and it’s not enough to address the housing shortage we’re facing today. Innovative construction methods have a role to play in solving that crisis. It’s not a silver bullet, but it can be a meaningful addition to our ability to build the housing that California so desperately needs.”
Industrialized construction offers a number of benefits, such as production in a controlled environment. But the biggest benefit might be the reduction in time. Time costs money when developing a building. (Besides money, there are additional advantages to reduced construction time; for example, neighbors would love to have dramatically shorter disruptions from extended building projects.)
Jason Ward, codirector of the RAND Center on Housing and Homelessness, recently wrote a CalMatters commentary in which he noted huge discrepancies in development costs between California and its chief nemesis, Texas. “The average apartment in Texas costs roughly $150,000 to produce; in California, building the same apartment costs around $430,000, or 2.8 times more,” he wrote. And he said that for subsidized, affordable apartments, California is four times more expensive. Though he cites numerous factors for the cost differential — everything from labor costs to local impact fees — he lists time as having the worst impact.
We’re still building homes in a similar way to what we did a hundred years ago, and it’s not enough to address the housing shortage.
— Office of Assemblywoman Buffy Wicks (D-Oakland)
When what you’re doing keeps producing bad results, it helps to look elsewhere for ideas. Naturally, we’ll ignore Texas. But Wicks and her colleagues looked to Sweden and Idaho for ideas about policy and building innovation to speed up housing construction and lower costs. Wicks’s office promised that she and her colleagues “will introduce a body of legislation this year based on the work they have undertaken and the knowledge they have gained in this space, underscoring their commitment to finding innovative ways to bring down the cost of housing for working-class families across California.”
A new focus on innovation and industrialized construction is not new to the United States; there have been false dawns before. But with Buffy Wicks and her legislative colleagues rolling out new policies addressing some of the biggest pain points, a new front has been opened in California’s ongoing housing wars.
Headline of the week
“Iran war hits housing market as mortgage rates rise to 6% on inflation fears”
— CBS News
Go figure
70: number of cities in the Bay Area in which the typical home value was more than $1 million in 2025 (Vital Signs) … Atherton: Bay Area community with the highest typical home value, at $7.16 million (Vital Signs) … –31.46 percent: change over the past three years in the number of active home listings in San Francisco (Realtor) … 22.70 percent: increase in San Francisco rents over the past year; the median rent is now $4,000 per month (Realtor) … 50 percent: number of repeat home buyers in their 70s who take out a mortgage (National Association of Realtors) … $641.62: cost to rent a one-bedroom apartment in the city center of Tehran; it’s only $394.40 outside of the city center (Travel Safe – Abroad) … $1 million: cost of the initiation fee for Mar-a-Lago; it was raised from $700,000 in 2024; annual dues are an additional $20,000 (MSN) …1 bedroom for 2 years: in contract negotiations with the Women’s National Basketball Players Association, the WNBA proposed providing a one-bedroom apartment for players earning the minimum salary in 2027 and 2028 only; developmental players would receive studio apartments for the entirety of the labor deal (ESPN).
Say what?
“In 39 states and the District of Columbia, more than 65% of households are unable to afford the median-priced new home, indicating a significant disconnect between higher new home prices, elevated mortgage rates, and stagnant household incomes.”
—”New Data Show Housing Affordability Concerns Across the U.S.” (National Association of Home Builders)