Housing Policy Sets Localities Up to Fail

Current California housing policy, under state mandated Regional Housing Numbers Allocations (RHNA), is resulting in a 99% failure rate for localities working in good faith to accommodate housing production – something is wrong! 

The current policy is not solving the true crisis in housing - affordability. Despite penalties for localities and incentives for developers, since 2023 the private sector built 83% market-rate housing.

RHNA housing policy is not meeting the stated objectives and there are so many impediments to actual construction of housing that localities are being set up for failure.

Articles “RHNA - Summary of State Housing Numbers Allocation” and “CITATIONS for RHNA Housing Policy”, by Kalish, Amy are included under RHNA in Resources- Development Challenges. 

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Background:

Current California housing policy, under state mandated Regional Housing Numbers Allocations (RHNA), is resulting in a 99% failure rate for localities working in good faith to accommodate housing production – something is wrong! The current policy is not solving the true crisis in housing - affordability.

To measure RHNA compliance, the state only counts permits pulled by developers who then actually build, and cities and counties have no control over when a developer builds. The full pipeline of locally approved projects not being built is astounding as developers are able to speculate – buying the approved project as a commodity, not building, and waiting years to sell at a profit. 

Despite penalties for localities and incentives for developers, the private sector is primarily building market-rate housing. Total housing built in California since 2023 is about 83% market rate, with the rest scattered between the lower income categories. 

Thus, California’s current housing policy is not solving the true crisis – our unsolved problem is affordability., i.e. low-income residential units, not the quantity of houses. The current housing policy is not meeting the stated objectives and there are so many impediments to actual construction of housing that localities are being set up for failure.

Marin County Example: Each city and each unincorporated county are mandated to build a specific number of residential units. Planning for this mandate often requires zoning changes and incentives for private developers to approve projects, pull permits and build. Based on unsubstantiated and unrealistic population growth numbers, the RHNA mandated units jumped exponentially in the current 6th cycle. Using unincorporated Marin County as an example, its 5th cycle RHNA mandate was 185, while the current 6th cycle RHNA mandate is 3,569 units between 2023 to 2031. 

The state’s Regional Housing Numbers Allocations (RHNA) mandate of 2.5 million housing units by 2031 is unsubstantiated and unachievable. It assumes housing needs for an additional 13.5 million residents, resulting in a total population of 52.5 million by 2031. However, California’s population has remained around 39 million since 2018 and will likely stay below 42 million even as far out as 2060, according to the California Department of Finance (RHNA Citations 1, 2, 3, 4, 5, 6, 7). 

This 10 million resident discrepancy between RHNA housing mandates and population projections is so large that the data forming the basis for RHNA mandates must be revisited and substantiated. The mandated 2.5 million housing units have been distributed throughout California, as if we are a state where “one size fits all,” with every area requiring significant growth in housing stock. Our regions’ jobs, housing, and geographic situations, including high hazard areas, are varied; thus, a more nuanced approach is necessary.

California’s housing shortage is unequivocally in the lower income categories. Growth in affordable workforce housing has stalled since the abrupt shuttering of Redevelopment Agencies in 2012. And our housing history demonstrates that merely increasing the amount housing will not lower prices.

Under RHNA, the for-profit market is expected to solve our housing needs. The current reality is that the private sector is producing large quantities of market rate housing, with only a small percentage of affordable units built in exchange for “bonuses and concessions” that allow projects to increase in unit density or building height and to avoid providing on-site parking (Citation 1).

Of the 2.5 million housing units required, 1.1 million are required to be market rate (Citation 56). Although the 2.5 million housing units for 13.5 million more Californians that current RHNA plans for are unsupported by fact, the housing mandates have not been adjusted in the face of predictions from the California Department of Finance that our population will not be growing. 

The RHNA requirements should be reconsidered based on real population numbers. Localities are struggling to meet the inflated numbers leading to mandates to site more housing than their local infrastructure, water supplies, traffic, or evacuation egress can manage. 

RHNA housing mandates are in dire need of realistic assumptions; an official state audit warned:

“…insufficient oversight and lack of support for its considerations risks losing public confidence” (Citations 10, 11, 12, 13, 14, 15, 16, 17, 18).

Again, our housing crisis is in affordability, not quantity of housing (Citations 12, 13). New research shows that upzoning — allowing more housing in an area originally planned for less density —increases land value, and housing prices rise as a result (Citation 15). Research shows that attempts of modifying zoning to encourage construction didn’t lower housing prices, rather housing became more expensive as cities densified; without meeting workforce housing needs (Citations 10, 12).

The current state policy is to rely on the private, for-profit market for all our state housing needs; if affordable housing isn’t required, it won’t be built (Citations 21, 22, 23, 24). 

Since our Redevelopment Agencies closed (Citation 25) the industry has predictably catered almost exclusively to the higher salaries our growing economy produced (Citations 19, 20, 21, 22, 23, 24, 25, 26, 27, 28).

Findings

Since 2023, when most new housing-streamlining laws came online, a mere 17% of new homes have been priced in reach for working people. With higher unemployment, higher interest rates and other economic trends, housing affordability will become even more critical in the years ahead (Citations 52, 53, 54).

Over a hundred housing laws are in direct conflict with California’s housing policy – this policy demands a spread of housing at different income levels, with 60% of the mandate below market rate. While the laws require almost entirely market rate multiunit housing (Citation 58), hoping that supply will “trickle down” as those with money move up into newer homes. 

To encourage housing production, laws allow many perks to developers, while affordability requirements are seen as “inhibitors to housing.” Localities have reluctantly dropped affordability requirements (Citations 32, 33, 34, 35) and the state’s density bonus laws that increase market rate units in exchange for small amounts of included affordable units amplify this effect (Citations 34, 35, 56).

At least 83% (Citations 38, 39) of all new housing is market rate, with the rest scattered between the lower income categories. This serves neither the state’s residents, localities or our true housing needs. Additionally, existing broad brush RHNA requirements force locations to take undue risks to comply with housing mandates. For example, it’s well known that fire revisits the same areas, due to terrain and wind flow patterns, but even the town of Paradise (Camp Fire, 2018) has a RHNA mandate of over 7,000 new housing units (Citation 50).

Under these conditions, clearly almost all, if not all, cities will fail to meet state mandated housing unit counts when reviewed in a couple of years (Citations 31, 44, 45, 46, 47, 48, 49).

Even if localities approve every project that is proposed, the state does not count “approved housing units” to determine progress toward the mandate. RHNA mandates are only satisfied when an approved project obtains building permits. There is little city or county officials can do to force an approved project to pull building permits; the state has set locations up for failure to meet housing mandates. 

State required streamlining of the housing permitting process has not increased the building of homes. Our economy increases the difficulty of building: Labor and materials are expensive and in short supply, making even some market rate housing unprofitable. 

For example, to build in the San Francisco Bay Area, (Citations 54, 55) it costs about a million dollars per unit — for both affordable and market rate homes – and the private market can’t make a profit by building affordable homes.

Another issue is that housing has become a commodity, and developers with approved projects are allowed to “flip” the land but not build. Again, the state only counts permits pulled by developers who then actually build, which is out of city and county control. . The full pipeline of locally approved projects not being built is astounding as developers are able to speculate – buying the approved project as a commodity, not building, and waiting years to sell for a profit.  —Land speculation (Citation 19) appears to not be recognized nor addressed by the state.

The state mandates the approval of housing units at all levels of affordability but does nothing to support or compel actual building of units, especially of homes affordable to working families. Then, it’s the localities that are blamed for not producing their mandated RHNA.

Conclusion

With a too-high RHNA mandate and no enforcement lever to compel actual building of housing, even localities with a full pipeline of approved projects still face penalties (Citations 52, 53). And no one is building affordable housing at any scale (Citations 31, 37, 38, 39, 40, 41, 42). 

State housing policy is set up to result in a 99% failure rate for localities working in good faith to accommodate housing production -- something is wrong!
(Citations 31, 44, 45, 46, 47, 56, 57, 58, 59, 60, 61, 62).

Sources: RHNA - Summary of State Housing Numbers Allocation” and “CITATIONS for RHNA Housing Policy”, by Kalish, Amy, August 2025.

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