Sacramento’s housing shortfall is not ‘normal.’ It’s a warning | Opinion

Sacramento permitted more housing in 2025 than in the previous year, and that progress is commendable. A nearly 15% increase in building permits is not nothing. But figures recently reported by The Sacramento Bee reveal that the city is far short of the homes it must deliver.

According to the city, Sacramento permitted 2,737 housing units in 2025. But to stay on pace with the state housing target, the city needed 5,698, according to The Bee. The city achieved less than half of the required production and is only 30% of the way towards its eight-year goal, with less than four years remaining.

This is not a rounding error. It is a structural failure.

Under its Regional Housing Needs Allocation obligation, Sacramento is required to plan for 45,580 new homes by May 2029. It reflects the housing the city needs for working families, young professionals, seniors, renters, first-time buyers and residents who are already being priced out by a shortage that has been building for decades.

City staff correctly observe that housing development is complex. But complexity cannot be an excuse for accepting chronic underproduction as inevitable. Sacramento does not need a single silver bullet. It needs a governing culture that treats housing production as essential infrastructure.

Accessory dwelling units, tiny homes on wheels, missing-middle zoning and parking reforms can all help. But they are not sufficient on their own. The city cannot ADU its way out of a 45,580-unit obligation, nor can it rely primarily on subsidized housing when the public dollars required to build those units are limited, unpredictable and nowhere near sufficient to meet total demand.

Sacramento needs affordable housing. It also needs attainable market-rate housing. It needs apartments, townhouses, condominiums, small-lot homes, starter homes, move-up homes and age-restricted communities. Every rung of the housing ladder matters because when one is missing, pressure builds everywhere else.

California and local governments have made housing too slow, too uncertain and too expensive to deliver at the scale the public needs. City staff acknowledged that policy must address building codes, condo defect liability and other barriers. That list should also include entitlement timelines, infrastructure requirements, impact and utility fees, environmental mitigation costs, affordable housing obligations, litigation risk and the accumulated costs and delays created by layers of regulations that may each sound reasonable by themselves but make projects financially infeasible in the aggregate.

In the Sacramento region, development fees now average $109,000 per new home, according to a recent regional fee study conducted by my organization. These charges apply before land, financing, insurance, infrastructure, labor and material costs are fully accounted for.

These costs do not disappear. They are paid by the buyer or renter. Sometimes these additional marginal costs — seemingly small in the context of the entire home price — mean a family can no longer qualify for an entry-level home. Sometimes it means fewer homes are built. And sometimes it means housing quietly disappears from the pipeline long before a shovel hits the ground.

Sacramento has made real progress and the city has taken steps that other communities should study. But the relevant question is not if Sacramento compares favorably to its peers, it’s whether the city is producing enough homes to restore affordability, support economic growth and give the next generation a realistic chance to live where they grew up.

Right now, the answer is no.

If the city wants different results, it must reduce the cost, risk and time required to build. That requires faster approvals, predictable standards, fee discipline, infrastructure financing that does not overburden new homeowners and elected leadership willing to say yes to housing even when the politics are uncomfortable.

Sacramento’s housing shortfall must be treated as a call to action. The solution is to make it easier, faster and less expensive to build the homes Sacramento admits it needs.

Timothy Murphy is president and CEO of the North State Building Industry Association.