Almost 40,000 affordable housing units across California remain stuck in the development pipeline, highlighting ongoing financing challenges that continue to slow construction across the state.
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A report released by Enterprise Community Partners found that 39,980 homes across 461 developments are currently waiting to move into the construction phase. Of these units, 39,217 are planned as rental housing, while 633 are intended for homeownership opportunities.
The findings show that even when projects receive initial funding approvals, many developments still struggle to secure the additional subsidies and tax credits necessary to begin construction.
According to the report, more than two-thirds of the stalled homes — roughly 25,000 units — have already secured funding from at least one state program. However, many still lack the full financing packages needed to move forward.
Without additional funding support, researchers warn that California could lose approximately $7.7 billion in outside investment tied to these developments.
To help projects advance, the organization estimates rental developments alone require $1.8 billion in state tax credits and $5.8 billion in tax-exempt bond financing.
The report recommends several policy measures to address the funding shortfall, including increased short-term housing investment in the 2026–2027 state budget, passage of the proposed housing bond initiative and reforms to streamline the state’s housing finance system.
In addition to financing barriers, developers are also dealing with rising operational costs such as insurance premiums and utility expenses, which further complicate project feasibility.
One major proposal aimed at addressing the funding gap is the 2026 Affordable Housing Bond Act, also known as AB 736. The measure would allocate $10 billion in bond funding to support new affordable housing developments and preserve existing properties.
Supporters say permanent funding sources will be essential if California hopes to meet its long-term housing goals.
The state has set a target of building 1 million affordable homes by 2030, but current financing challenges could slow progress toward that goal unless additional funding tools are implemented.
Meanwhile, the proposed 2026–2027 state budget introduced by Gavin Newsom does not currently include new allocations for several existing housing subsidy programs.
Those programs include CalHome, the State Low-Income Housing Tax Credit and Homekey+, all of which play a role in supporting affordable housing production.
A significant portion of the stalled housing projects is concentrated in Southern California. The report estimates that 9,533 units in Los Angeles and Ventura counties remain stuck in the planning or pre-construction phase.
Efforts have been made to accelerate approvals for affordable developments in the region. In 2022, Los Angeles Mayor Karen Bass signed Executive Directive 1, which was designed to streamline permitting and approvals for affordable housing projects.
While the directive helped simplify early approval stages, industry experts say it does not address the larger financing challenges that continue to slow projects after they receive permits.
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Developers and housing advocates argue that without stronger financial support from state and federal programs, regulatory reforms alone will not be enough to significantly increase construction activity.
One example of a proposed development facing funding challenges is Twin Park Landing, a 275-unit affordable housing project in Reseda, planned by The Pacific Companies.
The project is expected to rely heavily on the Low-Income Housing Tax Credit program, commonly known as LIHTC, to secure the capital required to move forward.
Industry leaders say projects like this illustrate the broader issue affecting affordable housing nationwide: demand for affordable units continues to rise, but financing gaps and escalating development costs often prevent projects from reaching the construction stage.
Unless additional funding mechanisms are introduced, thousands of affordable housing units across California may remain stalled in the pipeline despite already receiving partial funding approvals.
Originally reported by Matthew Kaufman in MHN.
