Every economic climate presents opportunities and California’s housing crisis is no different.
The state wants to build 2.5 million new homes by 2030 to meet the demand of an ever-growing population.
But those plans continue to be hampered by skyrocketing land prices, restrictive zoning laws, poor planning, elongated timelines and a proliferation of NIMBYs who reject development in their area.
The impact on housing is catastrophic and includes:
- house prices continuing to rise with they May, 2025 median of $788,920 the highest on the mainland
- rental prices continuing to climb because of record low vacancy rates under 3% in cities such as Los Angeles, San Diego and San Jose
- the ‘affordability gap’ widening to breaking point with nearly 30% of households spending more than half their income on housing, classifying them as ‘severely cash-burdened’.
It means there are several tried and true methods for developers and flippers in California to make their riches, while doing their part to ease the housing crisis.
Here’s how …
Infill development and other build-to-rents
In bigger Californian cities, zoning reforms and density bonuses are creating opportunities for developers to unlock under-utilized land.
Infill development and other build-to-rents can generate strong cash flow and long-term equity because of the strong rental demand.
They often receive fast-track approvals as well as state housing incentives.
These redevelopments may involve:
- subdividing lots
- converting single family homes into duplexes
- adding ADUs (accessory dwelling units) to existing homes
- building small multi-family units
Flipping and revitalizing distressed properties
Higher interest rates have triggered a rise in the number of distressed properties and foreclosures.
Attractive returns are on offer for flippers who focus on quality renovations for aging housing stock in older neighborhoods.
The local community also benefits by enjoying an increase in housing supply, reduced blight and revitalized streetscapes.
Acquiring distressed properties demands diligent research on the specific reasons for foreclosure, including market trends in the area and local building restrictions.
But it also offers many benefits including:
- lower acquisition prices
- potential for bigger profits in neighborhoods undergoing gentrification
- quicker resale cycles in high-demand markets
ADU development
ADUs (accessory dwelling units) are one of the fastest-growing sectors in the California real estate market.
Recent state laws have made it easier than ever to build detached or attached units on single-family lots.
Many cities such as Los Angeles, Oakland and San Diego are even offering pre-approved ADU plans, permit waiver fees and financing incentives to accelerate construction.
ADUs have benefits for developers and homeowners alike including:
- the ability to generate passive income through rentals
- a significant increase in property values
- creating affordable housing for extended families or local workers
Advantages and challenges of helping to alleviate California’s housing crisis
There are both advantages and challenges for flippers and developers hoping to make their fortunes in California from its housing crisis.
Advantages
Demand – California’s incredibly strong demand for housing means fast turnover rates while guaranteeing an endless supply of buyers and renters.
Appreciation – Strong property value appreciation offers the potential for significant returns on investment.
Flexibility – Flippers and developers can target buyers or renters and have multiple property types from which to choose including historic homes, modern housing and new developments.
Ownership models – Non-traditional ownership models can be explored such as community land trusts, housing cooperatives and social housing.
Challenges
Cost of entry – Only Hawaii has a more expensive real estate market that California, hence significant funding is normally required to undertake even basic projects.
Competition – California’s real estate market is one of the most competitive in the world and acquiring properties at the right price rarely occurs without a swag of prospective fellow buyers, pushing prices further north.
Location – California is one of the most diverse states in the country in terms of its localities and real estate on offer.
It demands comprehensive research to target the right properties at the right price and with the most potential for appreciation.
Market trends – It is essential to understand market trends, thoroughly analyzing local property prices and economic conditions in any neighborhood before purchasing to maximize ROI.
Red tape – California’s housing market is awash with red tape and regulatory restrictions and while many are being relaxed to alleviate the housing crisis, it is imperative to understand local building codes before buying in.
Financing – Traditional financing can take precious time flippers can ill-afford, often leading to them missing out on targeted properties.
Hard money loans may be more expensive but are better suited to flippers and developers by providing finance in as little as 48 hours.
Get help with funding your next California property project
The housing crisis in California is not going away any time soon.
Flippers and developers should not only view this as an opportunity to build wealth but also one where they can be part of the solution by delivering a social return.
But when opportunities arise in California’s highly competitive real estate market, fast action is essential.
That means access to hard money loans, tailored specifically to the needs of flippers and developers.
That’s why you need to be onboard with Equidy.
Equidy delivers on two fronts.
Firstly, they have an intimate and personal history with all aspects of property development in California for more than 40 years, working closely with their clients to ensure they maximize their leverage and return on investments without putting themselves at unnecessary financial risk.
And seconldy, they are an experienced hard money lender who stand by their core belief that anything is possible and are determined to prove it every single day.
Even in challenging economic times, they love to reward entrepreneurship and strive to help their clients realize their wealth creation dreams.
Equidy enjoys long and established relationships with serious investors, sellers and real estate professionals while leveraging their reputation and trust, using clear communication to minimise the risk to all parties.
Contact Equidy today to book your free strategy call.
