What Does $24 Billion Buy in the California Housing Market?

By Kevin D. Williamson

Thursday, September 03, 2026

 

Good news for housing-hungry Californians: A new development in Orange County was approved in May.

 

The bad news: Approval took almost 50 years.

 

The Saddleback Meadows project in Trabuco Canyon, California, first appeared on the Orange County supervisors’ agenda in 1978—when your favorite correspondent, who passed the eligibility age for unrestricted AARP membership a few years back, was in kindergarten.

 

As my Competitive Enterprise Institute colleague Steve Swedberg points out, most projects do not undergo such incredible delays, but the ordinary approval process is enough to add almost $40,000 to the cost of building an average new home—not only in California but across the United States. The problem—in California and elsewhere—is that there is typically no single decision-maker that can say “Yes” to building a house but there are multiple agencies and institutions that can say “No.”

 

“Permitting is rarely a single approval,” Swedberg writes. “It is often a series of reviews involving multiple agencies, each with its own requirements, timelines, and opportunities for revisions.” As he elaborates: There is the permitting process per se, which includes application fees and costs associated with hearings; next are costs from mandatory studies of factors such as environmental effect, traffic, and infrastructure demands; after that come costs associated with the issuing of approved permits, inspections, and utility-related fees.

 

“Permitting has become a significant driver of housing costs,” Swedberg concludes. “Direct regulatory requirements add substantial upfront expenses, while delays increase the cost of development as projects remain tied up in approval processes. These effects accumulate across the development cycle and are reflected in higher housing prices for both renters and buyers.”

 

California estimates that the state needs about 180,000 new housing units a year to come onto the market to keep up with demand, but actual construction has for years amounted to a little less than half of that, and production continues to lag in spite of some $24 billion in state subsidies. So reports a new study from Open the Books, a nonpartisan advocacy group mainly focused on transparency in spending.  

 

“Housing has become one of the defining political liabilities of Gavin Newsom’s governorship,” the authors of the study write. “He took office in 2019 promising 3.5 million new homes by 2025, a target the state has fallen drastically short of, with fewer than half a million units completed between 2019 and 2023. That gap has put Newsom under pressure from his own party’s pro-development wing, whose members have pushed him to override local zoning fights and speed up approvals. Newsom has responded in kind, at points threatening to force housing measures through the state budget process when legislative negotiations stalled. This year, he backed an $11.25 billion bond measure headed to the November 2026 ballot. It is aimed, in part, at funding tens of thousands of already-approved but still-unbuilt affordable units.”

 

Billions in subsidies to underwrite “affordability”—and the median price of a California house is pushing $1 million.

 

The regulatory two-step is a familiar dance: Regulate the market into utter dysfunction, and then try to camouflage the cost of that burden with subsidies.

 

It doesn’t work in California.

 

It doesn’t work anywhere. California may be almost unique in the low quality of its state governance, but its situation is not really qualitatively different from what obtains in many other states, including states that have reputations for better governance, such as Florida. As the Open the Books study points out, the difference between California’s rate of income growth (55.3 percent) and the rise in its housing prices (82.5 percent) from 2015 to 2024 was relatively good—with housing outpacing wages by 27 percentage points, California’s split was only 42^nd among the 50 states, while the difference in Florida was more than 70 percentage points. California continues to have significantly stronger long-term wage growth than Florida or Texas, with wages growing more than three times as fast as those in Oklahoma and almost 15 times as fast as those in New Mexico. There’s still some secret sauce left in the Golden State, misgoverned though it is. It is worth keeping in mind that there is a big demand side to the California housing equation, too.

 

Market-minded conservatives (there are a few left) and “abundance”-minded progressives widely agree about one thing when it comes to housing: There are too many parties holding veto power. And that is not limited to housing, of course: Businesses trying to build pipelines and other energy infrastructure have been dealing with that problem for decades, and businesses that want to build data centers are dealing with it in a big way right now.

 

Housing, energy, data centers: All of those undertakings have something in common. They don’t need subsidies—they need the busybodies to get the hell out of the way.