Let me walk you through what CalMatters Housing is reporting about California's housing production challenge, because it's something we talk about constantly in the Bay Area.
The state has been requiring all cities and counties to plan for building new housing to meet specific targets. Every eight years, the state's housing regulators assign each local jurisdiction goals across four different affordability levels, based on projected population growth and the need to address the decades-old shortage of affordable homes. This summer, most of the state, including all of Southern California, reached the halfway point of their current planning cycles.
Here's where it gets concerning. Less than one third of California's cities and counties are actually on track to approve enough market-rate housing, and the picture for affordable units is even worse. According to CalMatters Housing, only about 6 percent of jurisdictions are on pace to hit their very low income housing targets. This applies to homes affordable to people earning less than half the local median income. Only five jurisdictions statewide are issuing permits at a rate that would let them hit all four income-level targets, and four of those are small, rural, unincorporated areas. The fifth is Placerville, a town of about eleven thousand people in the Sierra Nevada foothills.
To understand the scale of the disconnect, the state set a total statewide planning goal of roughly two point five million housing units over eight years. That works out to over three hundred thousand new homes annually. According to CalMatters, even during California's strongest building booms in the early nineteen-sixties and mid-nineteen-eighties, we never came close to those numbers. In this decade, despite all the legislative changes aimed at boosting housing, we're only building slightly above one hundred thousand units per year.
The debate between city officials and housing advocates is sharpening. City representatives argue they cannot force developers to build and can only do so much with zoning and permits. Housing advocates counter that cities absolutely control fees, zoning rules, and approval timelines, and should be held accountable for making development realistic. The state housing department says it is actively monitoring and enforcing the commitments cities made in their plans and points to recent laws that streamline urban housing projects and require taller buildings near transit. But the production numbers suggest something still isn't working.
What I'm seeing locally here in the Bay Area and throughout the East Bay mirrors this statewide frustration. We have buyers desperate to find homes and sellers with limited inventory, yet we're not seeing the construction pace needed to actually solve this. The gap between planning and building is real, and it's affecting everyone's options whether you're trying to buy, sell, or develop. Until we see actual permits turning into finished homes at scale, these housing challenges will keep pressing down on our market.
