Housing Regulations: When Has it Gone Too Far?

By Michelle Gamble

How much regulations do housing builders need to adhere to before it's simply gone too far? A great question given that in 2024 alone over 230 housing-related bills were introduced to the California Legislature. Of those 230, around 90 reached the governor's desk for signature and 32 were adopted. It's not just 32 alone. You have to add that 32 pieces of regulation on top of pre-existing regulations. We already had 100 new regulations that became law since 2017. So, now the real question becomes: how many laws are required when housing itself doesn't change much from year to year? A house or multi-unit complex, structurally speaking, doesn't really change over time; so, why so many regulations being proposed annually?

"In my experience, the over-regulation of the housing industry in California has profound implications that many may be overlook," said David Hunt, COO, Versys Media. "With the three million homes shortfall, it's crucial to understand how the complexity of regulatory measures impacts not only construction timelines but also the overall availability of affordable housing."

Why this happens in the first place comes down to two things: power over things like land use and municipal control over how structures are built. "California has a long history of local authority, which means cities and counties wield enormous power over land use," said Eli Pasternak, founder and CEO, Liberty House Buying Group. "This creates a patchwork of contradicting ordinances, with many localities outright opposing new development to maintain their 'small-town feel.' State legislators then intervene, attempting to overturn local opposition, but rather than simplifying rules, they frequently introduce more complexity."

Pasternak continued, "For example, communities may establish arbitrary height limits or parking regulations, while the state replies with onerous compliance rules. What was the result? Even if a project is approved, red tape makes it slow and costly. Until California unifies its municipal and state housing goals, politicians will continue to fight this regulatory tug-of-war, with builders losing."

"Navigating the maze of regulations in California’s housing market is like trying to do a jigsaw puzzle with missing pieces," said Liz Hutz, owner, Liz Buys Houses. "One of the central reasons property owners face so many barriers is the intricate web of environmental and safety protections that, while well-intended, create a bottleneck effect. Each layer of regulation is often meant to address specific concerns — like wildfire prevention or seismic safety — but together they create a tangled mess that’s hard to sort out. The sheer volume of permit requirements and the various agencies involved mean that even minor renovations can be delayed for months or years."

"Engaging local and state lawmakers requires a shift in focus from regulation to collaboration," continued Hutz. "It might be useful to illustrate the real-world impact of these delays with concrete examples rather than broad statistics. This can include showing how stalled projects affect families and local economies. Lawmakers often respond to personal stories and data-driven insights that connect policy consequences directly to people’s everyday lives. Encouraging public-private partnerships might also provide a workaround, bringing urgency and efficiency to the projects that need it most."

The next layer of challenge touches on the social factors influencing the perception of what needs to be done to presumable help renters, often at the builders' and property owners' expense. While renter protection does matter, tipping one side too far to give the other side too much consideration never bodes well for anyone. A balancing act needs to exist. 

"I would assert that certain legislators regulate housing in the interest of equity, with the objective of safeguarding renters, maintaining affordable units, and guaranteeing environmental justice," said Joe Montanti, founder and CEO, MD Repairs. "Although these values are significant, they are frequently enforced through intricate regulations that have the opposite effect. Despite the fact that rent control laws, inclusionary zoning mandates, and protracted approval processes are intended to level the playing field, they frequently serve to discourage new development. The individuals whom the regulations are intended to assist are harmed by the increased costs that result from a decrease in the number of housing beginnings.

“Lawmakers may be compelled to present themselves as progressive by promoting symbolic legislation that generates media attention but complicates the reality on the ground," he continued. "For instance, the delay or cancellation of critical projects can result from the association of housing approvals with excessively broad environmental or labor standards. Rather than resolving the housing crisis, these policies impose an additional burden on private developers and small property owners, who are ill-equipped to navigate an interminable amount of red tape." 

"Recently, I worked with a client who was navigating California's regulatory environment to launch a new multi-unit residential project," said Hunt. "They faced an overwhelming number of compliance requirements, which stalled their timeline significantly. The proposed bills contribute to a landscape where developers must allocate substantial resources just to ensure adherence, which in turn inflates construction costs."

Hunt added, "Additionally, I believe that while regulations are meant to protect communities and ensure quality, they often fail to address the root issues of housing shortages. Innovative solutions that maintain necessary protections without stifling development are critical. For example, some of our projects leverage modular construction techniques which can expedite building processes while complying with existing regulations."

SOLUTIONS

As we face a significant housing shortage, problems with affordability, and figuring out how to mitigate environmental impacts, solutions need to be identified to alleviate these problems. Continuing to push against nonstop resistance and obstruction at the state and local levels doesn't resolve the problems. We need objective, collaborative, reasonable proposals to move forward. 

"Efforts to sway lawmakers away from over-regulation involve creating a narrative that isn’t just about opposing current policies but showcasing successful models from other regions or countries where streamlined regulations coexist with safety and environmental responsibility," said Andy Kolodgie, founder, Sell My House Fast. "Building coalitions of stakeholders — developers, community leaders, environmentalists — can present a unified message emphasizing the need for reform." 

"One angle is the potential of innovative building technologies, like prefabricated homes or 3D printing, which could circumvent some traditional regulatory hurdles," said Hutz. "These technologies often face fewer initial restrictions and can be a game-changer in accelerating construction timelines. Advocate for laws that recognize these innovations and make the permitting process simpler for these advanced methods could turn the tide in the current regulatory environment. This approach not only cuts down on bureaucracy, but also embraces evolving construction methods that could redefine industry standards."

"In my experience, I've worked with homeowners whose roofing projects have been delayed due to extended permit approval processes," said Ali Hassan, roofing specialist, Rabbit Roofing. "It's frustrating for both the property owners and the contractors, as it leads to increased costs and lost time. A possible solution is pushing for streamlined regulations that expedite permitting and allow more flexibility for property owners while ensuring safety. Simplifying these processes can help speed up recovery and address the housing shortage more efficiently."

The sheer economic impact of over-regulations makes it imperative for property owners to become active in creating solutions by working with lawmakers. Understanding of each side's concerns, engendering understanding of impacts on the community, and collaborating on positive solutions offers the best strategies for solutions. We have much to solve in the East Bay, so let's do it together.

Michelle Gamble is the editor of Rental Housing Magazine.