State lawmakers’ latest proposal to resolve California’s housing affordability problem is yet more taxpayer borrowing that doesn’t address the root of the crisis. Gov. Gavin Newsom recently signed the Veterans and Affordable Housing Bond Act of 2026, putting an $11.25 billion bond on the November ballot.
The bond would borrow $10 billion for so-called affordable housing programs and $1.25 billion for a self-supporting veterans’ home loan program. Unfortunately, while California’s housing crisis certainly needs continued reforms and political action, these proposed bonds would not meaningfully improve affordability.
The state’s housing shortage is largely driven by restrictive land-use regulations that make it hard to build and limit supply. In recent years, California has enacted good reforms to reduce some regulatory barriers, but substantial obstacles remain.
The California Environmental Quality Act (CEQA), for example, continues to delay housing projects and provide opportunities for opponents of growth and housing to create lengthy legal and regulatory challenges that derail them.
Other state reforms intended to increase density allowances, which allow more units on a given parcel, have included limitations that render them largely ineffective.
Further, local regulations such as large minimum lot size requirements and restrictive aesthetic standards make new housing construction even more difficult and expensive.
Any efforts to increase available units and reduce housing prices, including more public spending, that do not address these regulatory barriers cannot sustainably improve California’s housing affordability.
In contrast, where California has embraced structural regulatory reform, housing production has surged. Accessory dwelling units (ADUs) are the clearest example. From 2018 to 2024, California permitted over 139,000 ADUs and completed nearly 80,000. This growth was driven by homeowners and builders voluntarily building housing once regulatory barriers were reduced.
Beyond failing to address the root of the housing crisis, this bond would add substantially to the state’s already enormous public debt without the desired payoff. Reason Foundation estimates that California’s combined state and local debt is already over $1 trillion, the highest total of any state and the 7th-highest state debt per capita.
Further, recent public spending on affordable housing projects has proven wasteful and extremely costly to taxpayers. Culver City, for example, is currently supporting an affordable housing project that will create just 67 units at an estimated cost of $50.2 million, or over $749,000 per unit.
Costs on this scale, which produce so few additional units, demonstrate the inefficiency of public spending as the attempted solution to a much larger housing shortage driven by excessive supply restrictions. Instead of continuing to spend, enabling more construction in California would produce more housing at a lower cost while improving affordability.
A common concern about allowing more market-rate construction is that removing restrictions will only add luxury units while failing to help lower-income households. However, mounting evidence demonstrates that adding housing at any price point can reduce pressure on surrounding rents and improve affordability over time.
Unfortunately, the housing types that are typically the most affordable, including small homes, multifamily buildings, and other denser forms, often face the heaviest legal and regulatory restrictions today. Making these types of homes easier to build is a direct way for state and local leaders to improve housing affordability for middle- and low-income families.
California cannot borrow and spend its way out of its housing affordability crisis. Despite recent successful housing reforms, transformative regulatory action is still needed to create a dynamic housing market capable of producing sufficient housing for Californians. This proposed bond would increase the state’s public debt without sustainably expanding housing supply, leaving younger Californians who already can’t afford housing to bear the added tax burden.
Policymakers should instead continue to eliminate unnecessary and duplicative environmental reviews for housing projects, reduce the acceptable reasons for denying permits, and remove zoning laws that limit where housing can be built. Furthering the deregulatory efforts that have already shown results will offer a real and lasting path to housing affordability.Eliza Terziev is a housing and land use policy analyst at Reason Foundation.