Will the California SB 9 bill tank the market?

[Lane Kawaoka]

Will this drive more people migrating to California from other states or will people shy away from living in California? Or should you go oos?

My brief understanding of the new law:

Senate Bill 9 is a bill that allows lot splits and two-unit projects in single-family zones making the single family homes and multifamily homes to coexist in the same zone.

As the population becomes denser in California, there is a continuous demand for residential property.

Multifamily homes can cater to this booming population.

However, the costs of real estate might be far from a decline.

[Joe Splitrock]

I have said for a long time that houses in California are not worth $1.5 million dollars. Many of these houses would cost under $200K in my market. The LAND holds the value. This law allows splits up to 4 units, but also requires the owner to occupy for 3 years. It is a house hackers dream. Tear down a single family home, build a nice duplex or fourplex, then sell the property in 3 years to an investor for nice profit. Or move out and rent the fourth unit.

The obvious down side is these neighborhoods will reduce in quality. A neighborhood full of single family homes is more desirable than one filled with duplex and fourplex. Density brings renters, traffic and noise. New people moving in may not care, but long term residents will not enjoy the change.

I don't see that this bill drive people out of California, not in any larger numbers than already leaving. If you are willing to sit in traffic for hours and deal with smog, you are not going to care about this. People get conditioned to their surroundings. I guess it could be the last straw for some people who considered their home a quiet oasis in the concrete jungle of California. 

Either way, as I said in my first point, the LAND holds all the value. Being able to split that into 2-4 unit multifamily will only increase land value.