California Real Estate Laws 2025:

Ava Berian

Feb 12

3 min read

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Important Changes for the New Year

California has introduced a set of impactful real estate laws that promise to reshape the housing landscape in 2025. From making housing more affordable to supporting sustainability, these new laws are designed to tackle the state’s housing challenges while offering fresh opportunities for homeowners, developers, and investors.

Here’s a breakdown of the most important changes:

More Affordable Housing: SB 8, SB 9 & SB 10

New laws are clearing the path for affordable housing by allowing higher-density development in areas that were previously limited to single-family homes. SB 9 and SB 10 make it easier for cities to build more units, especially in urban areas, helping to address California’s severe housing shortage. This will help to improve the statistics of home sales, which were on a decline in 2023.

Impact: Developers will have more opportunities to build affordable housing, and homeowners may see their neighborhoods grow in density. — **Impact**: Developers will have more opportunities to build affordable housing, and homeowners may see their neighborhoods grow in density.

Short-Term Rentals: AB 2154

Cities now have the power to regulate short-term rental platforms like Airbnb, limiting how many days a property can be rented out. This is a move to ensure more properties are available for long-term tenants.

Impact: Property owners who rely on short-term rentals may face stricter limits, reducing their rental income potential. For renters, this could mean more available long-term options. — **Impact**: Property owners who rely on short-term rentals may face stricter limits, reducing their rental income potential. For renters, this could mean more available long-term options.

Accessory Dwelling Units (ADUs): AB 487

The state is making it easier for homeowners to build ADUs, such as granny flats or backyard cottages, by removing permit and zoning barriers.

Impact: Homeowners can more easily create extra rental units or space for family, increasing property value and rental income. Expect a rise in ADUs, especially in suburban and urban areas with extra land. — **Impact**: Homeowners can more easily create extra rental units or space for family, increasing property value and rental income. Expect a rise in ADUs, especially in suburban and urban areas with extra land.

Sustainability Standards: AB 983 & SB 382

New green building codes will require energy-efficient and zero-emission construction for all new builds and major renovations. This is part of California's broader push for sustainability.

Impact: Homes with eco-friendly features will attract environmentally conscious buyers, although construction costs may rise initially due to these new standards. — **Impact**: Homes with eco-friendly features will attract environmentally conscious buyers, although construction costs may rise initially due to these new standards.

Property Tax Relief: SB 845

Homeowners who qualify will benefit from capped property tax increases and be allowed to transfer their tax base when moving to a new home. This will help older homeowners stay in their homes longer without facing escalating tax bills. This could affect the previously-owned home market.

Impact: Homeowners will have more financial stability, which could reduce turnover in some neighborhoods and keep long-time residents in place. — **Impact**: Homeowners will have more financial stability, which could reduce turnover in some neighborhoods and keep long-time residents in place.

Housing Data Transparency: AB 1450

AB 1450 mandates better access to housing data, giving developers and investors a clearer view of housing trends, availability, and market conditions.

Impact: More transparent data will help investors and developers make smarter, more informed decisions about where to invest and build. — **Impact**: More transparent data will help investors and developers make smarter, more informed decisions about where to invest and build.

To Summarize:

These new laws are a step forward in addressing California’s housing crisis by promoting affordable housing, easing the creation of ADUs, encouraging sustainable building practices, and providing financial relief to homeowners. While some investors may face challenges, opportunities abound for those looking to develop or invest in homes with ADU potential or green features. Whether you're a homeowner, developer, or investor, staying on top of these changes will be crucial in navigating the evolving California real estate market. For more news and information on San Diego Real Estate, visit www.SDAR.com.