It’s no secret that California continues to find itself mired in a housing crisis that has become increasingly dire. The latest data from the California Association of Realtors shows that a paltry 18% of California households can afford to purchase a median-priced single-family home.
There are no quick fixes to alleviating the state’s housing woes. We’ve seen various efforts aimed at increasing the state’s housing supply, including initiatives to increase the construction of accessory dwelling units and incentivize modular housing production. While these efforts are well-meaning, they are a drop in the bucket when it comes to making real, tangible progress toward building desperately needed new housing.
The hard truth is that California’s housing affordability crisis is the result of decades of legislative and regulatory actions that have constrained, and in many instances, outright stopped new home construction. As a result, not only has the supply of housing woefully failed to meet the overwhelming demand, but we are now seeing a decrease in new home permitting activity.
According to the latest estimates from the U.S. Census Bureau’s Building Permits Survey, close to 102,000 new homes were approved in the state in 2024, about 10,000 fewer than the year prior. In the first half of 2025, permitting was 16% below the 37-year average pace.
If measurable progress on housing is to occur, Sacramento must begin by rethinking the state’s Vehicle Miles Traveled (VMT) regulations. Best described as imposing a “New York State of Mind” approach to housing, these new regulations levy a fee on new home construction outside urban areas to compel more compact, expensive high-density housing similar to what you would find in New York City.
This deeply flawed approach to housing construction rests on the ideology held by many elected officials and big-government planners that California’s ever-increasing greenhouse gas emission goals can be met by forcing people out of their cars by building more high-density housing in neighborhoods close to jobs and public transportation. VMT penalizes residents who simply want to buy a new home in neighborhoods located outside of crowded cities.
While there is a role for new high-density housing near jobs and public transportation, it should not be the overwhelmingly dominant form of housing construction in California over the next several decades. Because VMT regulations essentially impose a hidden tax on new home construction outside of urban areas, homebuilders are required to comply with onerous, financially unrealistic mandates.
Early estimates indicate that the VMT framework could add hundreds of thousands of dollars in new mitigation costs per housing unit. As a result, homebuilders are forced to either pass these costs on to the consumer or not build at all. Either way, VMT fees only worsen California’s housing shortage.
Last year, state lawmakers rushed to pass last-minute legislation designed to address VMT’s numerous flaws. Regrettably, the end result was a set of new regulations that were not thoroughly vetted and, as a result, made compliance economically unfeasible.
Reforming the state’s VMT regulations by working in partnership with the homebuilding industry needs to be a top priority for state lawmakers in 2026. The Building Industry Association of Southern California will continue our efforts to work with stakeholders from the public and private sectors to develop common-sense solutions that increase the supply of housing in California.
For younger generations, the American dream of homeownership is fading away. If we do not collectively decide to commit to a future of full and fair housing development and construction, there is simply no way forward for our economy or community.
Jeff Montejano serves as CEO of the Building Industry Association of Southern California.