The supply of homes in California is at a record-low level, something we have mentioned consistently over the past year or so. Luckily, the California Legislature has concocted a potential solution to this issue through SB6 and SB15. COVID-19 served as a catalyst for things that were already in the works; namely, shifting to online retail to reduce the overhead costs associated with a commercial space. These bills would alter existing zoning laws and allow developers to convert abandoned shopping malls and big box retail stores into residential properties. Given that an analysis by UBS shows that online shopping will represent a quarter of all retail sales, and that up to 100,000 stores will close across the country by 2025, it stands to reason that there will be a large number of locations that could be repurposed into affordable housing.
At the same time, there is another bill that would pay local governments to alter zoning in a manner that would allow for the construction of affordable housing, rather than doing it outright, in an effort to avoid undermining their authority and avoid litigation. This method has the added benefit of acknowledging that local officials are in a better position to identify locations that would serve the legislation’s express goals, whereas Legislators in Sacramento are not.
While everyone agrees that housing has become a serious issue, not everyone agrees on how to address that issue. In fact, a 2020 bill designed to override local zoning laws in favor of small apartment homes in single-family neighborhoods failed to make it pass the state Senate. At the end of the day, it’s clear that something will be done to address the housing crisis, which will have the net impact of further cooling the rapid price growth Southern California homes have experienced over the past year.
At the Chernov Team we understand that knowledge is power, and knowledge of legislative enactments that will impact housing prices is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.