Bipartisan federal housing bill can help — if California does its part

The “21st Century ROAD to Housing Act” has passed Congress, with bipartisan support. The question is whether it will help Americans — and Californians in particular.

The answer is: It depends on what state and local governments decide to do.

With California comprising a vast share of the US housing market, the state has an outsized interest in the new federal legislation. Combine that with the fact that home ownership remains unaffordable for the average California resident, and no state will be more affected by the changes the bill makes to the housing market.

The legislative process was constructive, with participation from both political parties. It gathered enough support in a deeply divided Congress to pass and to arrive at President Donald Trump‘s desk for signature (delayed, for now, because he wants his SAVE America Act on voting integrity to pass first). 

The question is whether the housing bill will provide any significant benefit to the American people, or if it was just “virtue signaling.”  

There are a multitude of compromises and many aspects to this bill, which the authors are touting as the “most significant housing bill in 50 years.”  Let’s take a look.

The bill caps the number of single-family homes that major investors — “Wall Street money” — can buy at 350. But the bill declines to force investment companies to sell what they already own, to avoid fracturing the housing market.  

Possibly the biggest win in the bill its the way it revises how the National Environmental Policy Act (NEPA) impacts local development projects.

The act streamlines NEPA reviews, and in many cases exempts projects from NEPA review altogether.  Most projects are exempted if they are built or modified on urban “infill sites” (vacant or underutilized lots in developed areas).

Another huge advance concerns manufactured housing. Most people still see manufactured housing as mobile home parks, but the industry has advanced far beyond that. The bill eliminates an ancient rule requiring manufactured housing to be built on a permanent steel chassis. 

Other than saving up to $10,000 per unit, this change will enable the easy building of multi-story homes onsite, making it much easier to integrate manufactured housing into urban sites. 

The cost savings of manufactured housing could dramatically lower housing costs, expanding the availability of entry-level housing without diminishing the quality. This is a big win. 

There are many minor changes that may have a major impact. The bill updates maximum loan limits for FHA mortgage insurance to recognize current housing prices and to adjust for inflation.

One of the weakest parts of the bill pertains to local permitting and zoning barriers. These are controlled by thousands of local, county and state governments, and are a major impediment to new housing construction. 

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The bill provides economic incentives to encourage the loosening of development restrictions, and creates a $200 million annual Innovation Fund to prod local governments to streamline permitting.

Also, the massive Community Development Block Grant program will require communities to report on permitting barriers and other regulations that slow down local housing construction.

Still, permitting and zoning remain in the hands of state and local governments, which may limit the significant benefits the bill hopes to achieve with these provisions.

The biggest financial element of the bill is a set of changes to banking rules to increase private investment in affordable housing. The bill also increases funds available through Department of Housing and Urban Development (HUD) programs and other federal programs.  

All of this, put together, will still fall short of solving the significant national housing shortage. The 2026 Economic Report of the President – CEA – The White House estimates the country’s shortage at 10 million homes. 

The bill could begin to make progress in the limited ways that the federal government can intervene. But it leaves much to state and local government.

If California wants to build more homes, and make home ownership more affordable, it will have to lead from the bottom up.

Gov. Gavin Newsom is already at odds with many local governments in California over his housing policy, which emphasizes increasing urban density and building more “affordable” units for the poor and the homeless.

If California can move beyond these ideologically-charged debates to a discussion about how to build homes of all kinds, then the new federal bill should be a great asset — if and when Trump signs it.

Bruce Bialosky, a former presidential appointee, is a certified public accountant specializing in taxes.