The shortage of affordable housing remains a pressing issue in California, making homeownership unattainable for millions of residents, particularly minorities and households with moderate income.

The California Housing Affordability Tracker reports that housing payments for a typical CA home are over $5,500 per month (as of Q3, 2024). Additionally, the annual household income needed to qualify for a mid-tier home mortgage is over $221,000 - a staggering amount for many Californians. 

SB 1123 represents an important step in easing the housing crisis by making it easier to build affordable “starter” homes in single-family residential areas.  

In this article, we will explain:

California Senate Bill 1123 (SB 1123) is a statute that aims to address housing shortages by streamlining the approval process for small-lot subdivisions and residential housing developments in California. 

Specifically, this bill allows for the development of up to 10 residential units on eligible lots in areas zoned as single-family.

This bill was signed into law on September 19, 2024.

SB 684, which took effect on July 1, 2024, is very similar to the new SB 1123. In fact, SB 1123 is seen as an extension of SB 684.

Like SB 1123, SB 684 streamlined the approval process for lot subdivision and building more starter homes. However, unlike SB 1123, SB 684 was signed into law with the limitation of applying only to areas zoned as multi-family. 

SB 1123 extends the streamlined process from multi-family areas into single-family areas, promoting greater housing density in single-family residential neighborhoods.

One serious criticism of SB 684 was that it applied only to multi-family zoning and did not include single-family zoning. This limitation was problematic because it restricted the potential for increasing housing density in areas dominated by single-family homes, which account for a significant portion of residential zoning in California. 

By limiting the streamlined process to multi-family zones, SB 684 only allowed for the development of new affordable homes in areas that were already comparatively affordable and densely populated. This has important implications for racial equity. 

Because of the systemic issues that have kept marginalized communities from acquiring the same income levels and wealth as their white counterparts, Black, Latinx, and Asian Californians have traditionally been excluded from overwhelmingly white single-family neighborhoods in CA. The households in these groups that were able to become homeowners typically purchased affordable properties in densely populated urban areas.

So, when SB 684 excluded single-family zoning from the streamlined development process, it inadvertently promoted more segregation in communities. 

SB 1123 seeks to correct this inequity by creating a greater inventory of affordable starter homes in single-family neighborhoods. This ensures that homes in single-family neighborhoods become more financially accessible to new homeowners of all backgrounds.

Furthermore, SB 1123 broadens affordable homeownership options by including models like tenancies in common (TIC) and community land trusts. These inclusions make SB 1123 a more versatile tool for addressing California's housing crisis.

SB 1123 received strong bi-partisan support from California’s legislature, passing the Senate on May 21, 2024, by a vote of 31-5, followed by the State Assembly on August 28, 2024, with a 44-9 vote.

The provisions of SB 1123 are set to be implemented on July 1, 2025, allowing local agencies time to adjust their planning and zoning processes accordingly. 

Although SB 1123 marks significant progress, addressing California's housing crisis demands continuous effort and innovative solutions. The hope is that SB 1123’s expanded pathways to affordable housing will foster more diverse and inclusive communities, creating benefits that extend beyond individual residents to the entire state.