Dive Brief:
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California state Senators last week gave the green light to a new fee on some real estate transaction documents, like deeds and notices, with the potential to generate up to $300 million for affordable housing projects each year, according to the Associated Press via U.S. News and World Report.
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The bill had strong Democratic support but saw pushback from Republicans, many of whom preferred to see the state reduce building regulations prior to funding new subsidized housing. The bill now heads to the state Assembly.
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Although the bill isn't applicable to residential and commercial property sales documents, it includes mortgage refinancing among the transactions it covers.
Dive Insight:
California faces a critical housing shortage. By one measure, the state has created 100,000 fewer units annually over the last decade than it has needed to keep up with demand. Middle-class residents are affected acutely, earning too much to qualify for subsidized housing but not enough to afford to buy a home at today’s prices.
That’s one reason the real-estate transaction fee faces resistance. As the AP reported, California builders and developers are subject to a bevy of building regulations, and many lawmakers say reducing some of those first would have a greater impact on housing availability, lowering prices accordingly, than would adding new fees to fund affordable housing.
Last month, CA state senators passed a handful of bills to help make a dent in the latter aim. Among them was Senate Bill 35, which would let developers choose a streamlined approvals process for high-density, multifamily mixed-use projects with affordable units in areas that are behind on meeting their housing production goals. A $3 billion affordable housing bond was also approved.
State lawmakers like Sen. Scott Wiener, who put forth Senate Bill 35, are also pushing for the inclusion of more market-rate housing in the state’s efforts to grow its housing supply. After all, it's not only lower-income households that are feeling the strain of the tight supply and high prices characterizing California's housing market.
The state's major cities are some of the most active housing markets in the country, with Vallejo, San Francisco, Sacramento, San Jose and San Diego ranking among the top 10 “hottest” real-estate markets in June, according to Realtor.com. Single-family homes in the state spent a median 22.4 days on the market in May, compared to 24.2 days in April and 27.4 days in May 2016, according to the California Association of Realtors. Meanwhile, the number of active listings declined for the 23rd-consecutive month, down 12.4% year-over-year, leaving California with a 2.9-month supply of homes on the market in May.