Congress Advanced Some Major Housing Reforms. Here’s How It Could Impact California

As California’s housing crisis spreads across the country, Congress is finalizing a package of bills to forestall the worst of the Golden State’s fate by proposing what some national experts say are among the most significant federal housing reforms in years.

The proposed bills attack the country’s housing shortage at multiple angles: from innovating construction methods to simplifying federal programs to encouraging localities to plan for more housing.

And in many cases, they emulate laws California has already enacted.

Local housing activists say Congress’ bills are unlikely to result in big changes here, but that some could support California’s goal of building 2.5 million homes by 2030 by jumpstarting construction innovation and further streamlining existing laws.

“The federal government could be doing a lot more to really put the pedal to the metal, but this is a good first step,” said Laura Foote, executive director of YIMBY Action.

Both the House and Senate have been working on bipartisan bill packages since last year, which were consolidated earlier this month into the 21st Century ROAD to Housing Act. Last week, the Senate approved the package, but House leaders have called for a conference to discuss changes to the bill.

At the center of the debate is a recently added provision, which limits large institutional investors from buying single-family homes, a proposed rule President Donald Trump requested in February.

On Friday, he announced his own set of reforms: two executive orders aiming to tackle both supply and demand. One order seeks to remove regulatory barriers, such as green building mandates, from permitting requirements, while the other loosens mortgage lending regulations for community banks, according to the White House’s fact sheets.

California experts say, should Congress’ suite of bills pass, it could amplify or complement efforts locally in some of the key areas they say have been clogging the housing production pipeline for years: old construction methods, lengthy environmental reviews and outdated regulations.

Reforming some of those outdated federal regulations could help boost the state’s factory-built housing industry, which local lawmakers are paying close attention to this year. Congress’ package includes multiple provisions to improve financing for modular housing and removes outdated safety standards that industry experts argue makes manufactured housing more expensive.

If passed, the federal regulations could work in lockstep with local bills encouraging modular and factory-built housing construction across California. State Assemblymember Buffy Wicks, a Democrat from Berkeley, plans to soon introduce a package of state bills aimed at the issue.

David Dworkin, CEO of the National Housing Conference, a housing advocacy coalition, said Congress’ focus on modular housing could also help Californian communities rebuild faster after a wildfire.

“I can tell you right now, if [Congress passes] this, people in California are gonna see it immediately in places like Altadena and other communities that were devastated by these fires,” he said. “It’s gonna significantly improve the ability to create housing off-site and design it so that it matches the existing architecture.”

He also noted parts of the federal package were inspired by California’s recently passed laws streamlining state environmental reviews.

The federal package proposes similar streamlining under its national counterpart, the National Environmental Policy Act, for a number of federally funded projects, including infill housing, small-scale construction and rehabilitation work. Dworkin said those changes were more palatable for Congressional progressives because of the reforms California already enacted.

“President Trump would never say this,” Dworkin said, “but I think that Gov. [Gavin] Newsom gets to pat himself on the back on this one.”

The federal legislation could also complement California laws like AB 609, which exempts infill housing from state environmental review, by exempting those projects from national review as well.

Other recently passed California laws could get a boost from Congress’ package, including SB 79, which encourages dense housing near busy bus stops and train stations. That law could work in tandem with Congress’ package, which would reward projects built near public transit with easier access to federal funding.

The proposed federal bills could also help California develop housing more quickly by encouraging localities to approve standardized designs.

Tara Roche, project director for the Pew Charitable Trusts’ housing policy initiative, pointed to a 2023 California law that required cities and counties to create pre-approved designs for accessory dwelling units (ADUs), also known as in-law units or granny flats.

Congress’ bill takes that a step further by offering grants to local governments to develop a similar type of “pattern book” for ADUs, as well as for duplexes and townhomes. Roche said that could speed approval timelines.

Still, California housing advocates say the bill package could go further to penalize cities and counties that don’t want to allow more housing. Foote said she doesn’t think the bills “will greatly change the incentives for cities” in California.

“This doesn’t have a lot of sticks,” she said. “This is all carrots.”

Bay Area Congressman Sam Liccardo, D-16, sponsored two of the bills that became part of the House’s package, which focus on making it easier to build affordable and infill housing with federal dollars. He said the reality of these bills is that they “will marginally reduce the cost of construction,” but said every dollar counts.

And, he said, the fact that Congress was able to agree on something is in itself commendable.

“It’s a group of modest improvements on housing policy,” he said. “We need to do far more, and we need to go far faster, but I think we should celebrate a first step.”