What California’s New Transit-Oriented Housing Law Means for Real Esta
California has long been at the center of national housing debates. With soaring home prices, limited inventory, and some of the longest commute times in the country, lawmakers continue to search for ways to create more housing. One of the most significant moves this year came with the passage of Senate Bill 79 (SB 79), a law designed to reshape housing development around transit hubs.
While the bill has stirred controversy for overriding local zoning authority, it also opens new opportunities for real estate investors. By allowing denser development near transit stations, SB 79 addresses two challenges at once: California’s housing shortage and the financial struggles of its transit systems. For investors, this means new projects, new markets, and new long-term strategies to consider.
What SB 79 Does
SB 79, authored by Senator Scott Wiener of San Francisco, focuses on “upzoning” neighborhoods within a half-mile of passenger rail, subway, and light rail stations in counties with at least 15 qualifying stations. This includes Los Angeles, San Diego, San Francisco, Santa Clara, Sacramento, Alameda, San Mateo, and Orange Counties.
Within these areas, developers can build taller, denser apartment projects, in some cases up to 75 feet, or about seven stories, even if local zoning would normally prohibit it. This marks a significant shift for many communities that historically limited multi-family housing in favor of single-family homes.
Beyond housing supply, the law also aims to support struggling transit agencies. Denser development around rail and bus corridors means more riders, less reliance on cars, and potential new revenue streams for agencies that can now develop their own land.
Why Investors Should Pay Attention
For investors, SB 79 creates several key opportunities:
- Prime Locations
Properties near transit have always carried a premium. With SB 79, parcels near these stops can now support larger projects, increase value and returns. - Sustained Demand
California’s housing shortage ensures long-term demand, especially for rentals near jobs and transit. Younger workers and families in particular are seeking alternatives to long commutes. - Partnerships with Transit Agencies
Agencies are now allowed to develop land they own, creating potential for public-private partnerships and unique investment opportunities. - Mixed-Income Incentives
Projects must include some affordable housing, but added density can still improve profitability. For investors already structuring mixed-use or affordable deals, this could be an advantage.
Controversy and Opposition
SB 79 has been one of the most debated bills of the year. Critics argue it strips too much power from local governments and risks placing tall buildings next to single-family neighborhoods. Supporters counter that relying on local governments has worsened California’s housing shortage by empowering opposition to growth.
Practical Limitations
While historic in scope, the rollout will take time. Developers still face high interest rates, labor shortages, and steep land costs. Piecing together parcels near transit hubs is not easy, and meaningful supply increases could take years.
Industry experts predict only a few dozen projects may materialize in the first five years. Still, even gradual growth around California’s transit corridors could reshape investment opportunities over time.
The Bottom Line
For investors, SB 79 highlights California’s move toward transit-oriented housing as a long-term strategy to ease the housing shortage. While challenges like costs and timelines remain, the law creates new pathways for denser, more profitable projects in high-demand markets. Keeping an eye on opportunities near transit hubs could prove valuable in the years ahead.
At Pacific Direct Mortgage, we partner with brokers, buyers, and lenders to deliver fast, flexible Private Money solutions when traditional financing falls short. Based in Santa Rosa, we fund Hard Money loans for single-family, multi-family, and investment properties throughout California, including Sonoma County helping you close quickly on even the most challenging scenarios.
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