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SB-684 Opens New Opportunities for Multi-family Development Projects
The construction industry took a major hit during the COVID-19 pandemic. According to Associated General Contractors of America, 68% of contractors had projects canceled, and 48% saw ongoing projects come to a halt. Now, as the industry recovers, demand for housing is stronger than ever. However high costs, slow approval processes, and limited land availability are making new development difficult.
If you're an investor looking for opportunities in this challenging market, Senate Bill 684 also known as SB-684 might be the answer. This law simplifies approvals for small-scale homebuilding specifically in California, making it easier to develop new housing.
SB-684 as a Faster Path to Small-Scale Housing Development
With home prices staying high and interest rates squeezing buyers, new construction is crucial. However traditional zoning laws and lengthy approval processes have made small-scale development frustratingly slow.
SB-684 changes that. It allows urban lots under 5 acres to be split into parcels as small as 600 square feet, speeding up approvals for projects with up to 10 units. This means investors can build efficiently, and meet the growing demand for smaller, more affordable homes.
Imagine a property owner in LA who has a vacant 10,000-square-foot lot in a multifamily zone. Normally, they would have to go through a long and expensive process involving public hearings, environmental impact studies, and city reviews just to split the lot and build multiple units.
With SB-684, things change. The owner can now divide the lot into smaller parcels with a streamlined ministerial approval process instead of waiting months or even years. This cuts carrying costs, speeds up construction, and helps bring much-needed housing to a high-demand area.
A Game Changer for Small-Scale Developers
The housing shortage isn’t going away anytime soon. The National Association of Realtors (NAR) projects a 13.9% increase in new home sales for 2024, following a 12.3% rise in 2023. But even if more existing homes enter the market, it won’t be enough to close the supply gap. Many homeowners with low pre-2022 mortgage rates are holding onto their properties, keeping inventory tight and demand high.
Major investors recognize the potential in homebuilding. Howard Hughes CEO David O’Reilly even called 2024 “the golden age” for homebuilding, citing demand that far exceeds supply. But it’s not just large corporations that can benefit. California’s SB-684 is opening doors for smaller investors as well.
Traditionally, real estate development required deep pockets and a strong grasp of zoning laws. SB-684 changes that by allowing lot splits and small-scale development with fewer regulatory obstacles. Investors can now take advantage of vacant urban lots, streamline approvals, and build much-needed housing faster.
California needs more housing, and SB-684 provides a practical way to build it. As supply chain issues ease and construction costs stabilize, investors who take advantage of these new regulations can create much-needed housing while setting themselves up for long-term success in a market where demand keeps growing.
Check if your property is eligible for SB-684
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