Lack of affordable housing is an ongoing crisis in California, keeping homeownership out of reach for millions of residents, especially those with moderate incomes. 

While the median household income in California was just $91,905 in 2024, the median home price in the state was $869,000 – 9.4 times higher than the annual income. 

SB 684 is a significant step toward addressing this housing crisis by making it easier to build affordable “starter” homes.  

In this article, we will explain:

A long-time symbol of the American Deam, homeownership provides a path to security and financial stability. Unfortunately, this dream is increasingly out of reach for many Californians. 

As of Q3 2024, the Housing Affordability Tracker finds that purchasing a 2-bedroom home is nearly twice as expensive as renting in the Golden State.

Is it any wonder why such a low percentage of Californians own their homes?

With only 55.8% of residents owning their homes, California ranks second-to-last in the US for homeownership rates (behind only New York with its rate of 54.1%). 

Sadly, minorities in California face even more significant barriers to homeownership. In 2023, the Latinx homeownership rate was just 45.9%, and the Black homeownership rate was a worrying 36.6%. This homeownership gap also feeds into a widening wealth gap. Without the ability to build home equity, Black and Latinx households hold a small fraction of the wealth held by their white peers.

California Senate Bill 684 (SB 684), which took effect on July 1, 2024, is a statute designed to address housing shortages by streamlining the approval process for small residential developments within the state of California. 

Specifically, it allows property owners to subdivide multifamily lots in developed areas to create subdivisions with up to 10 houses, townhouses, or condos in multi-family-zoned areas. 

SB 684 amends the 1974 Subdivision Map Act (a California law regulating subdivisions and lot splits) to facilitate the creation of more housing on a single parcel of land. This is intended to increase housing inventory without the lengthy (and costly) public hearings or environmental review process​.

SB 684 includes provisions to protect existing housing that is either rent-controlled or designated for low-income tenants, ensuring that new developments do not increase housing displacement. Additionally, it incorporates requirements to prevent the demolition of housing that falls under certain protections or has been occupied by tenants in the recent past​. The goal of these provisions is to make sure the streamlined process doesn’t come at the expense of renters, particularly those with low income.  

Any project benefiting from this bill must still comply with local housing, environmental, and tenant protection standards.

The focus on “starter” homes is intentional as CA looks to provide affordable homeownership options for moderate-income families. The idea is to enable developers to create smaller developments that offer affordable units without extensive bureaucratic barriers. These starter homes are seen as a crucial entry point for families who may otherwise be priced out of the market.

By emphasizing infill projects (projects in already-developed areas), SB 684 increases housing density without sprawling into undeveloped areas. This strategy uses available land more efficiently and sustainably.

SB 684 underwent many changes in its journey through California’s legislature. 

Originally, the bill was meant to streamline the building process in both multi-family and single-family areas.  In fact, the bill passed the State Senate in this form with unanimous support in May 2023. This is a clear indication of the bipartisan recognition of California’s housing challenges. 

However, amendments from the Assembly Appropriations Committee narrowed its reach, excluding single-family zones from the streamlined process. Historically, many Californian communities have resisted new development due to concerns about new units altering neighborhood character and negatively impacting property values. This NIMBY (not in my backyard) position has been criticized as contributing to class and racial inequality, keeping lower-income minorities out of wealthy, predominantly white, neighborhoods. 

SB 684 ultimately passed the Assembly in September 2023 in its restricted form. It was signed into law by the governor on October 11, 2023.

This change in the bill from its original form to its final form underscores both the complexities of housing reform and the compromises necessary to make progress. 

While SB 684’s amendments limited its original scope, the bill still represents a step forward for affordable housing in California. By making it easier to develop smaller, more affordable homes, SB 684 could help reduce the homeownership gap and provide new opportunities for moderate-income families. 

As California continues to combat its housing shortage, SB 684 highlights both the potential for change and the challenges that come with it. Future efforts will need to build on this legislation, expanding affordable housing options across all communities and ensuring that barriers to homeownership are dismantled for people from every demographic.