California has long faced a housing affordability crisis, and in 2025, the issue remains at the forefront of state politics. Governor Gavin Newsom’s proposed budget for the 2025-2026 fiscal year, which includes substantial investments in affordable housing, aims to address this ongoing challenge. However, the proposal has sparked significant debate among lawmakers, housing advocates, and local governments.
The California state government has set ambitious goals to build 2.5 million new homes by 2030, with a focus on low- and middle-income housing. In an effort to address the state’s housing shortage, Newsom has outlined a series of policies that include expanding zoning laws to allow more dense housing developments and providing tax incentives for developers to build affordable units. However, critics argue that the governor’s plan falls short in addressing the root causes of the crisis, such as rising construction costs and bureaucratic delays in approving housing projects.
One of the most controversial aspects of Newsom’s proposal is the plan to increase the use of state-owned land for housing development. California owns a significant amount of undeveloped land, and some legislators argue that utilizing this land for new housing could provide a quick solution to the crisis. However, environmental groups have voiced concerns about the environmental impact of such developments, particularly in areas that are home to endangered species or critical ecosystems.
Another major element of Newsom’s housing proposal is a significant investment in affordable housing for homeless individuals. California has the highest homeless population in the nation, and the governor’s budget allocates $1 billion to expand shelters and provide long-term housing solutions for those living on the streets. The proposal includes funding for the construction of new supportive housing units and the creation of permanent housing subsidies for low-income renters. Housing advocates have praised this aspect of the budget but argue that more needs to be done to address the underlying causes of homelessness, such as mental health issues and substance abuse.
Local governments, particularly those in high-demand urban areas like Los Angeles and San Francisco, have expressed concerns about the governor’s proposals, particularly the push for more high-density housing developments. Some city officials argue that the state’s policies could lead to overcrowding and strain already overburdened infrastructure. These officials are calling for more flexibility in zoning laws and additional funding for public infrastructure projects to ensure that new developments are sustainable.
In Los Angeles, where the cost of living has skyrocketed over the past decade, housing affordability is a top issue. The city has seen a steady increase in rent prices and home values, pushing many residents out of their communities. In 2025, a new report from the Los Angeles Housing Department revealed that the city has fallen short of meeting its housing production targets, and many areas in the city remain severely underserved in terms of affordable housing.
The 2025 housing proposals are part of a larger trend of growing tensions between state and local governments over housing policy. As California grapples with its ongoing housing affordability crisis, the debate over how best to address the issue is likely to continue throughout the year. The proposed policies may not be the ultimate solution, but they represent an important step toward addressing one of the most pressing issues facing the state.
