Federal Housing Policy Revolution: How Bipartisan Congressional Action Could Transform San Diego's Real Estate Market
A remarkable shift is occurring in Washington D.C. that could fundamentally reshape housing markets across the country, including here in San Diego. According to a comprehensive policy panel hosted by the Center for California Real Estate (CCRE), housing advocates and policy experts are reporting unprecedented bipartisan congressional focus on housing supply and affordability issues. This federal attention represents a dramatic departure from decades of housing policy neglect and could deliver tangible benefits to San Diego buyers, sellers, and investors in the coming years.
The Great Awakening: Congress Discovers Housing
For the first time in generations, housing has emerged as a priority issue that transcends traditional partisan divides. David Garcia, policy director for Up for Growth, captured this transformation perfectly when he noted, "There's so much more interest in the last couple of years, even just this Congress, from policymakers at the federal level in being much more proactive about supporting local and state efforts to increase housing supply and improve affordability."
This congressional awakening didn't happen in a vacuum. The nationwide housing crisis has reached such severe proportions that even federal lawmakers, traditionally focused on national security and economic policy, can no longer ignore the local impacts of housing unaffordability. When metropolitan areas like San Diego rank among the world's most expensive housing markets, the ripple effects extend far beyond real estate into workforce development, economic competitiveness, and social stability.
The bipartisan nature of this interest is particularly significant. Housing affordability affects constituents across the political spectrum, from young professionals struggling to buy their first homes to seniors on fixed incomes facing rising property taxes and maintenance costs. This broad impact has created unusual political alignment around the need for federal action to support housing production and affordability.
The Supply-First Strategy: Lessons from San Diego's Success
The federal policy discussion has coalesced around supply as the most urgent priority, a recognition that aligns perfectly with San Diego's recent experiences. Our region's successful Accessory Dwelling Unit (ADU) program, which has become a national model, demonstrates how regulatory reform can quickly increase housing options and improve affordability.
Since California streamlined ADU regulations in 2017, San Diego County has seen thousands of new housing units created through conversions and new construction. These units provide affordable rental options, enable homeowners to generate additional income, and create opportunities for multigenerational living arrangements. The success of this program has attracted national attention and influenced federal policy discussions about scalable housing solutions.
The federal focus on supply-side solutions represents a fundamental shift from previous approaches that emphasized demand-side subsidies or rent control measures. By prioritizing regulatory reform, zoning flexibility, and production incentives, federal policymakers are acknowledging that sustainable affordability requires increasing the overall housing stock rather than simply redistributing existing units.
This supply-first approach could particularly benefit San Diego, where restrictive zoning, lengthy approval processes, and high development costs have constrained new construction for decades. Federal support for local regulatory reform could provide the political cover and financial incentives needed to implement more aggressive housing production strategies.
Manufactured Housing: The Federal Seal of Approval
One of the most intriguing developments in federal housing policy is the growing recognition of manufactured housing as a key affordability tool. Lesli Gooch, CEO of the Manufactured Housing Institute, highlighted federal legislation under consideration to modernize the nation's 50-year-old federal building code, which could dramatically expand where and how manufactured homes can be built.
"We need this legislative change that allows us to build more...to allow us to bring our houses to more places with that federal seal of approval," Gooch explained. This federal standardization could overcome local resistance to manufactured housing by providing quality assurance and regulatory clarity that has been lacking for decades.
For San Diego, this development could be transformative. Manufactured housing has historically faced significant barriers in our market due to local zoning restrictions, financing challenges, and social stigma. However, modern manufactured homes bear little resemblance to the mobile homes of previous generations. Today's manufactured housing features sophisticated designs, energy-efficient construction, and build quality that often exceeds site-built homes.
The potential cost savings are substantial. While traditional construction in San Diego costs $400 to $500 per square foot, manufactured housing could potentially deliver comparable quality at $200 to $300 per square foot. For a 1,200 square foot home, this could represent savings of $120,000 to $360,000, making homeownership accessible to thousands of San Diego families currently priced out of the market.
Federal building code modernization could also enable innovative housing types that combine the affordability of manufactured construction with the design flexibility needed for San Diego's diverse neighborhoods. This might include manufactured ADUs, modular infill housing, and factory-built homes designed specifically for California's seismic and environmental conditions.
The ROAD to Housing Act: A Comprehensive Federal Response
The centerpiece of federal housing policy discussions is the Senate's draft ROAD to Housing Act, which represents the most comprehensive federal housing legislation in decades. This bipartisan proposal includes provisions that could directly benefit San Diego's housing market through multiple mechanisms.
The Act includes incentives for housing production at the city level tied to community development block grants, creating financial rewards for jurisdictions that streamline approval processes and increase housing supply. For San Diego, which has already demonstrated leadership in housing innovation through ADU programs and transit-oriented development, these incentives could provide significant federal funding to accelerate existing initiatives.
Project-based rental assistance provisions in the ROAD Act could help address San Diego's affordable housing shortage by providing long-term funding commitments that make development projects financially viable. This approach addresses one of the key challenges facing affordable housing developers: the uncertainty of ongoing subsidy availability that makes it difficult to secure construction financing.
The Act also includes specific provisions for manufactured housing that could overcome regulatory barriers at the state and local levels. By establishing federal standards and providing implementation support, the legislation could accelerate the adoption of manufactured housing solutions in markets like San Diego where local resistance has historically limited options.
Addressing the Extremely Low-Income Challenge
Kim Johnson from the National Low Income Housing Coalition emphasized that federal housing resources must prioritize extremely low-income renters, citing the shortage of 7.1 million affordable and available homes for the nation's 10.9 million extremely low-income renters. This focus on the most vulnerable populations could significantly impact San Diego's affordable housing landscape.
San Diego's rental market, where 48% of households are renters, includes many residents who fall into the extremely low-income category. These households, typically earning less than 30% of area median income, face the greatest challenges in finding affordable housing and are most vulnerable to displacement during market upturns.
Federal programs that provide direct financial support for extremely low-income renters could help stabilize San Diego's rental market by reducing the risk of displacement and homelessness. This stability benefits not only individual families but also the broader community by reducing the social and economic costs associated with housing instability.
The emphasis on extremely low-income housing also creates opportunities for developers and investors willing to participate in affordable housing programs. Federal subsidies and tax credits can make these projects financially viable while providing stable, long-term returns for patient capital.
Innovation and Opportunity Zones: Leveraging Federal Tools
The federal policy discussion has also highlighted the potential for opportunity zones and other innovative financing mechanisms to support housing development. These programs provide tax incentives for investments in designated low-income communities, creating opportunities to combine housing development with broader community revitalization efforts.
San Diego has several designated opportunity zones that could benefit from increased federal support for housing development. These areas, which include parts of downtown, southeastern San Diego, and other historically underinvested communities, offer opportunities to create affordable housing while supporting economic development and community improvement.
The combination of opportunity zone incentives with federal housing programs could create powerful tools for addressing both housing affordability and economic inequality. By concentrating investment in these areas, federal policy could help ensure that housing development contributes to community wealth building rather than displacement.
Federal support for small-dollar loans and alternative financing mechanisms could also benefit San Diego's housing market by enabling smaller developers and community-based organizations to participate in housing production. Traditional development financing often requires scale and resources that exclude many potential housing providers, limiting innovation and community participation.
Ground Leases and Federal Land: Creative Solutions
One of the most innovative aspects of the federal housing policy discussion involves the use of ground leases on federally owned land to support housing development. This approach allows federal agencies to maintain long-term ownership of valuable land while enabling housing development that serves community needs.
San Diego's significant federal presence, including military installations, national parks, and other federal facilities, creates potential opportunities for this approach. While security and mission requirements limit development possibilities on most federal land, strategic partnerships could enable housing development on underutilized federal properties.
Ground lease arrangements could be particularly valuable for affordable housing development, where land costs often represent the largest barrier to project feasibility. By removing land costs from the development equation, federal ground leases could enable affordable housing projects that would otherwise be financially impossible.
This approach also provides federal agencies with ongoing revenue streams while maintaining long-term asset control. For communities like San Diego, where land costs have reached extreme levels, federal ground leases could provide crucial opportunities to create affordable housing in high-opportunity areas.
State Models: Learning from Florida's Success
The federal policy panel highlighted Florida's State Housing Trust Fund as a model for effective state-level housing policy that targets deeply affordable housing while providing localities the flexibility to address community-specific needs. This model could inform both federal policy development and California's approach to housing finance.
Florida's trust fund demonstrates how dedicated revenue sources can provide stable, long-term funding for affordable housing development. The fund's flexibility allows different communities to address their unique housing challenges while maintaining accountability for outcomes and impact.
For California and San Diego specifically, the Florida model suggests opportunities to enhance existing housing programs by providing more flexible funding mechanisms and stronger local implementation support. The state's recent housing bond measures and legislative initiatives could benefit from incorporating lessons learned from successful programs in other states.
The federal interest in state-level innovations also creates opportunities for California to influence national policy development. San Diego's ADU success, California's housing element requirements, and other innovative approaches could serve as models for federal programs and incentives.
Materials Costs and Construction Challenges
The federal policy discussion has also acknowledged rising materials costs as a significant challenge for housing production nationwide. This issue is particularly acute in San Diego, where construction costs have increased dramatically due to labor shortages, regulatory complexity, and supply chain disruptions.
Federal policy responses to materials cost challenges could include trade policy adjustments, domestic manufacturing incentives, and research and development support for alternative construction methods. These approaches could help reduce the cost pressures that make housing development increasingly difficult in high-cost markets like San Diego.
The federal focus on construction innovation also aligns with San Diego's strengths in technology and research. Local universities, research institutions, and technology companies could benefit from federal funding for housing innovation, creating opportunities to develop and test new construction methods, materials, and financing approaches.
Support for construction workforce development represents another area where federal policy could significantly impact San Diego's housing market. The region's construction labor shortage constrains housing production and increases costs, making federal workforce development programs particularly valuable.
Economic Development and Housing Integration
The federal housing policy discussion reflects growing recognition that housing and economic development are inseparable issues. Communities that fail to provide affordable housing for their workforce face economic competitiveness challenges that affect long-term prosperity and growth.
San Diego's experience illustrates this connection clearly. The region's high housing costs have contributed to workforce shortages in key industries, from hospitality and healthcare to education and public safety. Young professionals often leave the region after completing their education, taking their skills and economic potential to more affordable markets.
Federal policies that integrate housing and economic development could help address these challenges by supporting housing development in areas with strong job growth and transportation access. This approach could help ensure that housing production supports broader economic objectives while improving affordability for working families.
The federal emphasis on housing supply as an economic development tool also creates opportunities for San Diego to leverage its existing economic strengths. The region's technology sector, research institutions, and innovation economy could benefit from federal programs that support workforce housing development.
Implementation Challenges and Opportunities
While federal housing policy developments offer significant opportunities for San Diego, successful implementation will require coordination across multiple levels of government and sustained political commitment. The complexity of housing development means that federal initiatives must work effectively with state and local policies to achieve meaningful impact.
San Diego's experience with ADU implementation provides valuable lessons about the importance of regulatory clarity, streamlined approval processes, and ongoing program refinement. Federal programs will need similar attention to implementation details to achieve their intended outcomes.
The federal focus on accountability and measurable outcomes also creates opportunities for San Diego to demonstrate the effectiveness of innovative housing approaches. Success in implementing federal programs could position the region for additional federal support and recognition as a national model.
Local capacity building will be crucial for maximizing the benefits of federal housing initiatives. This includes not only government capacity but also the ability of developers, nonprofit organizations, and community groups to participate effectively in federal programs.
Looking Forward: Federal Policy and San Diego's Housing Future
The emergence of bipartisan federal interest in housing policy represents a historic opportunity for communities like San Diego that have struggled with affordability challenges for decades. The combination of supply-side focus, innovative financing mechanisms, and recognition of housing as an economic development tool could provide powerful new resources for addressing local housing needs.
However, realizing these opportunities will require proactive engagement with federal policy development and strategic planning to align local initiatives with federal priorities. San Diego's track record of housing innovation positions the region well to benefit from federal support, but success will depend on continued leadership and collaboration across sectors.
The federal policy discussion also highlights the importance of maintaining momentum for housing production and affordability initiatives. Political support for housing can be fragile, and communities that demonstrate success in implementing federal programs are more likely to receive continued support and resources.
Conclusion: A New Era of Federal Housing Support
The bipartisan congressional focus on housing supply and affordability represents a fundamental shift in federal policy that could transform housing markets across the country. For San Diego, this development offers unprecedented opportunities to address longstanding affordability challenges through federal support for local innovation and production.
The key elements of emerging federal policy, including supply-side incentives, manufactured housing modernization, comprehensive legislation like the ROAD to Housing Act, and innovative financing mechanisms, align well with San Diego's housing needs and existing policy directions. The region's success with ADU programs and other housing innovations positions it well to benefit from federal support and serve as a model for other communities.
However, success will require sustained engagement with federal policy development, strategic coordination across levels of government, and continued commitment to housing production and affordability. The federal awakening to housing challenges creates opportunities, but realizing those opportunities will depend on local leadership and implementation capacity.
The convergence of federal policy support, local innovation, and urgent housing needs has created a unique moment in San Diego's housing history. The question is not whether federal policy will impact our housing market, but how effectively we can leverage federal resources to create more affordable, sustainable, and inclusive housing opportunities for all San Diego residents.
For more insights on federal housing policy and its implications for San Diego real estate, visit our website and follow our blog for expert analysis of the policies and programs that could reshape our local housing market.
Source: https://www.car.org/aboutus/mediacenter/newsreleases/2025releases/CCREfederalhousingpolicy