2026: A Year of Transformation and Transition for California Housing

At this stage of the California legislative cycle, attention typically focuses on the fate of new legislation and the pending state budget. This year, work on the newly established California Housing and Homelessness Agency (CHHA) additionally stands to transform the state’s affordable housing landscape in lasting ways.

The California Housing and Homelessness Agency (CHHA) will officially be operational on July 1, 2026, will house four existing agencies, and create the Housing Development and Finance Committee (HDFC), a “one-stop shop” to help align timelines for funding project applications and awards. To do this, the HDFC will consolidate awards for new-construction multifamily affordable housing into a public-facing process that provides simultaneous, complete funding for awarded projects.

Current companion proposals in the budget process would pair the state awards with a guaranteed reservation of tax credits and bonds through the Treasurer’s office. The unified applications and rules will ensure that awarded projects can move forward to construction more quickly, eliminating the time required to secure additional funding. The shortened timeline will likely decrease total development costs.

While the certainty brought forth by the new HDFC process can be transformational, the remainder of 2026 brings many competing uncertainties into the picture. In November, voters will likely determine the fate of a $10 billion housing bond whose resources will be deployed through the new HDFC process – both bills tied to the bond measure, SB 417 (Cabaldon, D-Napa) and AB 736 (Wicks, D-Oakland), are currently in the appropriations committees of their respective second houses. Without bond resources, there would be limited capital to put through the new HDFC pipeline and increasing pressure on the Legislature to find alternative funding through the general fund or other revenue-producing initiatives.

Another uncertainty revolves around the Gubernatorial election. While voters will make their final decision in November, the June primary will likely be determinative. With California’s “top two” primary system, if the June primary yields one Democrat and one Republican, there will be immediate political jockeying with the expectation that the next governor will be that Democrat. All interests and industry groups will not only be reading the tea leaves about where that presumed Governor will be on myriad issues, but will also begin seeking to influence those positions.

With a new Governor taking over in early 2027, this places further pressure on the reorganization efforts of the CHHA and HDFC to be solidified by the end of 2026. If these organizational efforts are realized and a housing bond is passed by voters, 2026 could emerge as a pivotal year for the state’s affordable housing finance system.