Michael Tubbs, who was mayor of Stockton from 2017 to 2021, is a former candidate for lieutenant governor and founder of the group End Poverty in California.
Homeownership is at the core of the California dream — for young families, nurses, teachers, firefighters and anyone hoping to put down roots and build generational stability. But a deep defect in California's housing laws has made that dream out of reach for all but the wealthiest — and it's one we can and should fix.
The defect is a 2002 law, Senate Bill 800, that effectively made condos – which are often starter homes – too legally risky to build. Hailed as a compromise between developers and consumer advocates that set up a process for builders to repair defects before being sued, SB 800 hasn't worked.
The problem is that making repairs under SB 800 doesn't actually protect builders from lawsuits, so developers wait to be sued to trigger coverage under their insurance policies. Plaintiff attorneys are paid only from cash settlements, so they have little incentive to push for repairs rather than litigation. Defects are dragged into the courtroom, delaying repairs, and as a result we no longer build condominiums at scale.
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New legislation from Assemblymember Buffy Wicks (D-Oakland) aims to fix this. Assembly Bill 1903 updates California’s burdensome construction defect rules to give developers a chance to fix problems in newly built housing before turning to costly lawyers and legal fees. Yet AB 1903 preserves the right to sue when builders refuse to repair. The bill passed the Assembly unanimously last month and will get its first Senate committee hearing Tuesday.
According to industry experts interviewed by UC Berkeley’s Terner Center for Housing Innovation, many “defects” that might trigger lawsuits could be categorized as minor or cosmetic (such as stucco cracking or paint chipping) rather than meaningful construction problems (issues with the foundation, plumbing or the roof, for example). Insurers, accordingly, price every multiunit starter-home project as a lawsuit waiting to happen, adding up to $18,300 per home to the cost of insurance compared to similar rental projects. To avoid these costs, most developers build rentals instead.
Not surprisingly, condo production in the Bay Area and Southern California has plummeted 90% from its peak 20 years ago, according to the Terner Center. San Diego County builders started construction on nearly 7,000 condos in 2005. Nowadays, there are only a few hundred new condo construction projects in that region each year. These homes are more affordable to working-class families, since they spread the cost of expensive, urban land among multiple buyers, in many cases dozens.
Mariel Garza
The impact is evident in California's homeownership rate. In 2000, according to the Terner Center, the share of adults in the state who owned their homes was 49.8 percent; that number fell to 43.5 percent in 2021. The gap between the national and state homeownership rates, at 15 percentage points, is the widest it has ever been.
That burden isn't shared equally. Only 10 percent of Black households and 9 percent of Latino households could afford a median-priced California home in 2024, compared to 21 percent of white households, according to a report last year by the California Association of Realtors. In 2021, the state Housing Finance Agency reported that the Black homeownership rate had fallen nearly 15 percentage points from 2004. A legal structure that limits the most accessible path to ownership for families of color only deepens the damage caused by racist lending practices in the past.
The litigation system has also largely stopped delivering for the buyers it was meant to protect. Attorneys take up to one-third of settlements plus litigation costs, leaving homeowners with significantly less to fund actual repairs. Meanwhile, developments under active litigation get placed on a Fannie Mae and Freddie Mac blacklist, effectively cutting off conventional financing for buyers and refinancing for existing owners.
Evelyn G. Alemán
The group Consumer Attorneys of California argues that Wicks’ bill weakens homeowner protections. But under the current system, condo construction has plunged by 90%, meaning the home buyers SB 800 was meant to protect can't afford to buy a home in the first place.
AB 1903 creates a fairer, more efficient process for buyers and builders. Construction defect claims must be supported by specific, documented evidence, and, unlike under SB 800, builders receive a release from liability once repairs are completed and inspected. That closes the loophole in SB 800 that made repairing a defect just as legally risky as ignoring it. Together, those changes lower insurance costs and litigation risk, enabling more starter homes to be built.
Growing up in Stockton in the 1990s and 2000s, I could see how owning a home shaped life outcomes across generations. And when I was mayor of Stockton from 2017 to 2021, our programs meant to stabilize families’ finances and housing still could not help them afford homes in the city where they were born.
That’s largely because there weren't enough homes to buy. We can fix that market “defect” by allowing builders to fix the physical defects in our homes without dragging them into court.
This piece was submitted via California YIMBY, a nonprofit organization that advocates for more affordable housing in California. Learn more about the organization at cayimby.org.
