By Zane Willman | Associate Advisor, CCG Real Estate Advisors
For years, building new homes in single-family neighborhoods meant one thing: red tape. SB 1123 changes that.
Since July 2025, a new California law lets developers and investors split vacant single-family lots into multiple small lots (up to 10 homes total) without public hearings, lengthy CEQA reviews, or endless city delays.
Think of it as a mini-subdivision shortcut.
What It Actually Does
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Lets you subdivide and build up to 10 homes on a vacant single-family parcel (under 1.5 acres).
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City approval is ministerial, meaning no discretionary hearings.
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60-day review window: if the City doesn’t act, it’s automatically approved.
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Homes must average 1,750 sq ft or smaller, aimed at the “missing middle” market.
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Applies only to vacant lots
Why It Matters for San Diego
San Diego’s biggest challenge is supply. This law gives small developers and landowners a way to create more for-sale housing in walkable, infill neighborhoods that were once locked up by zoning.
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That 10,000 sq ft vacant lot? You could now potentially split it into several fee-simple homes.
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The process skips CEQA and city hearings, cutting entitlement timelines from years to months.
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For investors, it opens the door to quick-turn infill projects that previously didn’t pencil due to permitting risk.
The Catch
It only applies to vacant lots in single-family zones outside high-fire or coastal hazard areas.
And you’ll still need to meet objective building codes. Utilities, setbacks, access, infrastructure, and more still apply.
Bottom Line
SB 1123 is one of the clearest opportunities we’ve seen for small-scale development inside single-family zones in recent memory.
For San Diego’s infill developers, it’sa great opportunity to acquire vacant lots under 1.5 acres and modeling new “starter-home” product that meets this criteria.
Closing Thought
At CCG Real Estate Advisors, our goal is to help private investors and developers capitalize on policies like SB 1123, bridging institutional insight with on-the-ground opportunity.
If you’re evaluating where new rules like these could unlock value in your portfolio, we’re here to help you future-proof your next project.
Schedule a call with our team here
