Letter in Support of CA Senate Bill 574, to streamline approvals for some single-family housing developments
April 7, 2025
Sen. Tom Umberg
1021 O Street, Suite 7510
Sacramento, CA 95814
Dear Sen. Umberg,
My name is Steven Greenhut. I am Western region director for the R Street Institute, a free-market think tank that works on a variety of issues including ones related to housing and redevelopment. We are proud to sponsor Senate Bill 574, which would provide streamlined ministerial approvals for single family housing developments where each home is 1,600 square feet or smaller, provided the development conforms to objective design and planning standards.
California’s housing shortage is well known. The median home price is now at around $829,000 statewide,[1] which is even more astounding when one considers the median prices in California’s large, coastal metro areas. In Orange County, the median price is $1.18 million. In Los Angeles County, that number is $864,000. In the eight-county San Francisco Bay Area, the median home price is $1.4 million, with two Bay Area counties with median prices above $2 million. Even inland areas have soaring home prices, with the Sacramento region’s $535,000 median price well above the national average.
As a Public Policy Institute of California (PPIC) study reported,[2] more than half of California renters and 40 percent of homeowners are “cost burdened”—spending more than 30 percent of their household income on housing. “Californians are increasingly concerned about these issues, with more than a third saying they’ve considered leaving the state due to housing costs,” according to its public-opinion survey.[3] The housing shortage compounds California’s homelessness crisis.
In 2015, the Legislative Analyst’s Office found[4] that the state needs to build 100,000 extra housing units a year—nearly double the current building rate. In fact, the Dallas-Ft. Worth metropolitan area generally permits more housing units than the entire state of California.[5] The LAO cited a variety of factors for the insufficient supply, but the key reasons included local-governmental building restrictions and the use of California Environmental Quality Act (CEQA) reviews to restrict construction.[6]
The Legislature has recognized the problem and in the past few years has passed a variety of laws that provide CEQA exemptions and streamlining to boost housing production.[7] These are noteworthy efforts, but the state still builds far fewer housing units than needed. The situation hasn’t improved significantly in the decade since the LAO report. At the R Street Institute, we applaud the past few years of streamlining laws, but the bulk of them mainly incentivize multi-family housing and subsidized projects.
Because many of the ministerial-approval efforts are so limited in application and have so many strings attached, these new laws haven’t made a sizable dent in the supply problem, especially related to the shortfall of market-based housing. According to a CalMatters review of a February report by YIMBY Law (a Yes In My Back Yard group that supports housing reforms), “this spate of recent California laws and others like it intended to supercharge the construction of desperately needed housing, have had ‘limited to no impact on the state’s housing supply.’”[8]
A UC Berkeley study from 2024 found that 96 percent of the state’s housing is reserved for single-family homes.[9] While it’s important to expand other types of housing options throughout the state, it’s doubtful that California will solve its housing crunch by simply expediting multi-family construction and designated affordable-housing units.
Simply put, the state also needs to incentivize the construction of market-rate and single-family construction. Another PPIC study confirms that a strong majority of Californians are supportive of efforts to loosen zoning rules. However, an overwhelming majority of adult respondents—71 percent—also say that they prefer single-family homes.[10]
Some might argue that the state already exempts from CEQA many single-family housing projects, but that is only the case in an extremely limited way. CEQA has three types of categorical exemptions. The first (Class 3) is for small structures, the second for housing-assistance projects and the third is for infill housing. The first category is most relevant given that this bill is designed to apply largely to market rate, single-family housing.
These current CEQA exemptions apply to “either one single family unit or a second unit, or a duplex or similar multi-family use with up to four units. In urbanized areas additional units are allowed, up to three single family or six multifamily units.”[11] Even the separate infill exemption applies mainly to small projects on fewer than five acres. These exemptions encourage a small number of units at a time when California needs to encourage a large number of units.
A 2021 report in Chapman Law Review shows that CEQA lawsuits are routinely used to stop all types of housing including new single-family-residence developments: “In 2020 alone, the study found, CEQA lawsuits sought to block approximately 48,000 approved housing units statewide—just under half of the state’s total housing production.”[12] Even a pro-CEQA report commissioned by the Rose Foundation found 15 percent of CEQA lawsuits were filed against housing-only projects and most CEQA lawsuits target projects on undeveloped land.[13]
Because of California’s high land costs—also driven up by regulations that reduce developable land— builders are incentivized to maximize the size of the homes that they build. The existing median home size in California is 1,860 square feet but new construction tends to be significantly larger.[14] This bill is designed to make it easier to build smaller new homes on undeveloped land and infill areas rather than large ones.
Smaller new construction homes will mostly be more affordable and will likely will be built on smaller lots and focus on the first-time buyers’ market. SB 574 will boost housing production and, by the nature of the exemption, also promote the urbanist goals of smaller lots and walkable communities.
The Legislature needs to ask itself whether its goal is to increase housing production—or to mainly promote higher-density, multi-family living. We believe the former should take precedence over the latter and therefore urge the passage of SB 574.
Best regards,
Steven Greenhut
Steven Greenhut
Western Region Director
The R Street Institute
sgreenhut@rstreet.org
(909) 260-9836
[1] Data & Statistics, California Association of Realtors, February 2025, https://www.car.org/marketdata/data/countysalesactivity
[2] Californians and the Housing Crisis, Public Policy Institute of California, Accessed April 7, 2025, https://www.ppic.org/interactive/californians-and-the-housing-crisis/
[3] Ibid.
[4] “California’s High Housing Costs: Causes and Consequences,” Legislative Analyst’s Office, March 17, 2015, https://lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.aspx
[5] Kenneth Schrupp, “Why Dallas permits more housing than all of California,” Free Cities Center/Pacific Research Institute, July 23, 2024, https://www.pacificresearch.org/why-dallas-permits-more-housing-than-all-of-california/
[6] “California’s High Housing Costs: Causes and Consequences,” Legislative Analyst’s Office, March 17, 2015, https://lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.aspx
[7] Database of California Land Use and Housing Laws, Terner Center for Housing Innovation at UC Berkeley, Accessed April 7, 2025, https://ternercenter.berkeley.edu/california-land-use-housing/
[8] Ben Christopher, “’Limited to no impact’: Why a pro-housing group says California’s pro-housing laws aren’t producing more,” CalMatters, February 24, 2025, https://calmatters.org/housing/2025/02/california-yimby-laws assessment-report/
[9] “A staggering 96% of California residential land is zoned for single-family housing, study finds,” UC Berkeley, May 31, 2024, https://phys.org/news/2024-05-staggering-california-residential-zoned-family.html#google_vignette
[10] Dean Bonner, “Desire for Action on Housing Contrasts with How Californians Want to Live,” Public Policy Institute of California, August 8, 2023, https://www.ppic.org/blog/desire-for-action-on-housing-contrasts-with how-californians-want-to-live/
[11] Categorical Exemptions, Southern California Association of Governments, Accessed April 7, 2025, https://scag.ca.gov/sites/default/files/old/file-attachments/ceqa_categorical_exemptions.pdf?1667860497=
[12] Jennifer Hernandez, “In the Name of the Environment Part III: CEQA, Housing, and the Rule of Law,” Chapman Law Review, 2022, https://www.chapmanlawreview.com/wp-content/uploads/2023/05/clr_26-1-57- hernandez.pdf
[13] Janet Smith-Heimer and Jessica Hitchcock, “CEQA By the Numbers: Myths & Facts,” The Housing Workshop for the Rose Foundation, May 2023, https://rosefdn.org/wp-content/uploads/CEQA-By-the-Numbers-2023-5-5-23- Final.pdf
[14] “The Median Home Size in Every U.S. State,” Virtual Capitalist, Accessed April 7, 2025, https://www.visualcapitalist.com/cp/median-home-size-every-american-state-2022/