California lawmakers target June ballot with $10 billion housing bond

California lawmakers are turning to bonds again in an effort to spur more affordable housing.

Senate Bill 417, the Affordable Housing Bond Act of 2026, would ask voters to approve $10 billion of general obligation bonds to fund affordable housing.

The bill stalled last year, but is advancing this year. It cleared the Senate Housing Committee by an 8-1 vote last week and is expected to be heard in the Senate Appropriations Committee next week.

Lawmakers are aiming for the June primary ballot, which would require the governor to sign it into law by Thursday.

The state has already passed several laws to make it easier to build new housing, Sen. Chris Cabaldon, D-Napa, who authored the legislation, said during a Jan. 6 hearing.

"But those homes don't build themselves and it's time to finish the job," he said. "To unlock the full promise of these reforms requires cash. It requires sufficient capital, as it always has, to move these affordable housing projects from approval and permitting to construction."

The measure would allocate roughly $7 billion toward the state's Multifamily Housing Program, which issues low-interest loans to build and maintain permanent and transitional rental housing for lower-income households. It also includes $2 billion for wildfire prevention, rental assistance and affordable housing for low-income tenants and farmworkers and $1 billion in downpayment assistance for low-income, first-time homebuyers.

The funding could support more than 40,000 affordable homes, said Cabaldon, adding that there are 45,000 affordable housing units that are shovel ready but have not been constructed because of insufficient state resources.

The California Association of Realtors 2026 economic forecast released in September projects that the state's housing affordability index ? defined as the percentage of households that can afford to purchase a median-priced home ?will rise to about 18% in 2026 up from 17% in 2025. It was 32% as recently as 2020. CAR also expects the median home sale price will increase by about 3.6% in 2026 to $905,000.

Zillow (ZG) says rent in California is 35% higher than the national average.

"The bonds would fund the construction, preservation and rehabilitation of affordable rental housing, and home ownership opportunities, while enabling California to fully leverage the substantial matching federal resources through the tax credit program," Cabaldon said.

The committee also approved a separate housing bond proposal for homeless teens authored by Sen. Caroline Menjivar, D-Van Nuys. Menjivar said she "couch surfed" for a year and a half when she was 19 and wants to see efforts targeting younger people as well.

Menjivar's measure would likely be absorbed into the larger measure.

On a parallel track, Assemblymember Buffy Wicks, D-Oakland, introduced Assembly Bill 736, another $10 billion housing bond, last year. The bill passed the Assembly on a 65 to 11 vote, with three members absent or abstaining, and was read in the Senate and assigned to the rules committee in June. There has been no movement on that bill since then.

The Statewide Housing Plan estimates that California needs 300,000 new housing units annually, including 125,000 affordable units for lower-income households. The state produced roughly 13,000 affordable units per year from 2014 to 2023, according to the plan produced by the California Department of Housing and Community Development.

Wicks, who has been at the forefront of efforts to tackle the state's housing crisis, was named by Assembly Speaker Robert Rivas in December to chair the newly-established Select Committee on Housing Construction Innovation, a body tasked with exploring and advancing modern, cost-efficient, climate-smart approaches to building new homes in California.

The committee will summarize its findings in a white paper early this year. The committee will then translate its findings into a legislative package aimed at removing barriers to construction and supporting responsible innovation in the construction phase of housing development.

The committee was formed because despite many recent laws to streamline zoning for housing development, construction methods have not kept pace with innovation in other industries, according to a statement from Wicks. This compares poorly to countries like Sweden or Japan that have shown it is possible to bring down costs by using prefabricated parts and modular housing, according to the statement.

"California has made real progress in the work to open up land and speed approvals ? but those gains won't matter if we can't bring down the cost of actually building homes," Wicks said. "This select committee will dig into the innovations that can meaningfully lower construction costs and help us produce housing at the scale Californians need."

The state's housing crisis has long been a priority of Gov. Gavin Newsom. He declared a state of emergency around homelessness when he released his budget in January 2020 ? though the COVID-19 pandemic took center stage that year.

He called the cost of housing California's original sin in his State of the State speech last week. He regularly claims in speeches, as he did in this one, to be the first California governor to allocate money toward housing in his budget ? to the tune of billions of dollars ? and to draft a multi-pronged housing plan.

"The responsibility fell to cities and counties, with little interest from Sacramento," he said.

"In the past few years, we have enshrined the most consequential housing reforms in our state's history," Newsom said. "Just last year alone, I was proud to sign 61 housing reform bills, clearing regulatory thickets, forcing local governments ? often resistant ? to get in the game, and modernizing environmental review."

The state has started to make progress, though it's not necessarily evident at street level in major cities.

"Early data, just compiled, shows that the number of unsheltered homeless people in California dropped 9% in 2025," Newsom said. He added that unsheltered numbers dropped 10.3% in Los Angeles, 19% in Riverside, and 34.8% in Contra Costa County. He compared that to the 18% increase in homelessness overall that occurred nationally last year.

"Our investments are paying off," Newsom said.

The proposed bond measure would come on top of the $6.38 billion Proposition 1 bond measure to build more supportive housing for unhoused people suffering from mental illness approved by voters in 2024. "In just 18 months, the state has already approved 70% of the new treatment beds and slots promised under Proposition 1 ? the fastest distribution of bond money in our state's history," Newsom said.

The state will implement the second phase of Proposition 1 on July 1, redirecting over $1 billion in annual mental health funding to housing and treatment for people living on the streets, he said. That aspect was somewhat controversial, because it takes money from a 1% millionaires tax that was already funding other programs for mentally ill people.

He also announced in his speech that he is introducing legislation that will restrict investment companies from purchasing single-family homes, which he said has had the effect of driving up home prices and rent.

"Over the next few weeks, we will work with the Legislature to combat this monopolistic behavior, strengthen accountability and level the playing field for working families," Newsom said. "That means more oversight and enforcement, and potentially changing the state tax code to make this work."