Federal Crackdown May Derail California’s Housing Breakthrough

California has finally tackled its biggest self-made hurdle: the layers of regulation that have long strangled urban housing growth. This summer, Gov. Gavin Newsom signed Assembly Bill 130 and Senate Bill 131 — landmark measures that massively roll back the California Environmental Quality Act’s power to stall development.

At the signing ceremony, Newsom declared, “This was too urgent, too important, to allow the process to unfold as it has for the last generation.” He framed the sweeping changes as “a budget that builds,” describing them as “a new mindset—one that prioritizes delivery over delay.”

Developers are lining up, ready to build infill housing near transit hubs without decades-long lawsuits blocking projects. For the first time in decades, California’s cities are seeing a real path to new supply.

But Who Will Build?

Yet just as local red tape is untangled, a new obstacle is tightening its grip: a shrinking construction workforce, driven not by local policy but by a national immigration crackdown.

More than 40% of California’s construction workers are foreign-born, according to the National Association of Homebuilders — including over half a million immigrants, many of whom are undocumented. These jobs — framing, drywall, roofing, concrete — are physically taxing and have long been avoided by native-born workers. Without this labor pool, the math of housing simply doesn’t work.

“Worksite immigration raids are supposed to free up jobs for citizens. Here’s what really happens,” reports CalMatters. Rather than fill openings with local workers, the crackdowns create fear and shortages, stalling projects and driving up costs.

A Perfect Storm

Tighter immigration enforcement — from expanded deportation priorities to increased raids — is pushing some workers underground or out of the state altogether. Even without dramatic sweeps, fear and uncertainty are enough to thin out the crews developers depend on.

The result? Just as California unlocks permits at record speed, there may not be enough crews to pour foundations or hang drywall. As Gilman warns, “The ‘abundance agenda’ could turn into a shelf full of blueprints.”

A Collision Course with D.C.

California has long clashed with Washington on climate, gun policy and reproductive rights. Housing could be the next front in this state–federal conflict. If construction delays mount, pressure could grow for Sacramento to push back against federal policy that undercuts its economic strategy.

“The deeper irony is hard to miss,” writes Gilman. “For years, the consensus was that California’s housing problems were self-inflicted — caused by too much regulation and not enough political courage. Now that the state is finally addressing those issues, it’s being undermined by a different kind of politics: a national campaign against the very people who build homes.”

What’s Next

California’s historic housing reforms could be a model for other states — but only if there are enough workers to deliver on the promise. The state may soon face a pivotal choice: stand up for the immigrant workforce that powers its construction sector, or watch as long-awaited housing plans stall once again.

The bottom line: without workers, faster permits won’t matter. California’s housing future depends not just on policy reforms, but on protecting the people who hold the hammers and raise the walls.

Why it matters

‍California’s housing shortage is a key driver of sky-high rents and homelessness. Slashing CEQA hurdles was seen as the big breakthrough.

‍What’s at stake

‍Without enough skilled immigrant labor, construction delays and rising costs could derail these wins.

‍What to watch

‍A legal and political showdown between Sacramento and Washington if the worker shortage stalls the state’s new housing push.

Originally reported by Nils Gilman in Cal Matters.