Only 1 in 5 Californians can afford a home. This ballot measure aims to change that
California voters will decide in November whether they want to help family members, friends and neighbors become homeowners – and give a much-needed boost to struggling new-home builders.
The California Coalition for Homeownership has collected more than 900,000 signatures for the Middle-Class Homeownership Act to land on the ballot this fall.
If approved by voters, the act would authorize $25 billion in revenue bonds for low-interest, downpayment-assistance loans for middle-class households to buy newly built homes.
The program could lead to the construction of as many as 190,000 single-family new homes – and power tens of thousands of good-paying jobs.
“Voters have the chance to unleash a wave of new-home construction across our state and make the dream of homeownership a reality for more middle-class Californians,” said proponent Bob Hertzberg, former California Assembly Speaker and Senate Majority Leader.
Program ‘won’t cost taxpayers a dime’
Only about one of every five households can afford to buy the median-priced home in California, a figure that drops into the teens and even single-digits in the Bay Area, Central Coast and parts of Southern California, according to the California Association of Realtors. Also, as noted in a recent report, fewer Blacks and Latinos can buy compared to the affordability rate for overall residents.
Four of five renters say the down payment and closing costs are a “significant obstacle” to purchasing a home, according to a recent Bankrate survey.
The Middle-Class Homeownership mortgage-assistance program would address that and help open the door to a new home – and help families build generational wealth.
“Our state and economy are stronger when we have more middle-class homeowners,” said California State Controller Malia Cohen, an honorary co-chair for the proposal. “Best of all, this measure won’t cost taxpayers a dime.”
The bonds would be paid back by homeowners that use the program and investors, according to the California Coalition for Homeownership.
The Middle-Class Homeownership Act is a far-reaching, forward-looking program. For some middle-class residents, the program could be the best – and maybe even only – way to buy a home.
“We need big, innovative solutions to make housing more affordable for more people,” said California State Treasurer Fiona Ma. “This measure will help do that by generating more capital for housing and assisting the middle class without adding to the state’s general fund obligations.”
‘Dream of homeownership closer to reality’
The cash-strapped state and lawmakers have developed numerous programs to help middle-class households become homeowners, such as the just-closed third round of the Dream For All program through the California Housing Finance Agency (CalHFA).
But the Middle-Class Homeownership Act has a much-larger financial commitment, about 10 times more than the federally funded Keep Your Home California program, which provided mortgage-assistance to ease foreclosures for hard-hit homeowners during the Great Recession.
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The California Association of Realtors and the United Brotherhood of Carpenters are strong supporters of the effort.
“Every day, we hear from middle-class Californians who simply want a fair shot at homeownership for themselves and their families – but affordability continues to stand in the way,” said CAR president Tamara Suminski. “By providing down-payment assistance loans – at no cost to taxpayers – this measure tackles one of the biggest barriers and brings the dream of homeownership closer to reality.”
Under the program, homebuyers must meet income requirements – earn no more than twice the median income for the county where they want to buy a home (see table below for a ballpark figure of income limits) – and pay at least 3% of the down payment. With a median home price of $889,000 in March, buyers would need at least $26,700 to qualify. Of course, the down payment needed would change depending on the county.
How the program would work
The Middle-Class Homeownership program would cover 17% of the down payment, a figure that eliminates the need for mortgage insurance and would save homeowners at least several hundred dollars per month.
Homeowners would make monthly mortgage payments, just like any other owner, but the down payment assistance is only paid back when they sell the house or refinance. The fixed-rate, low-interest loans would ban penalties for paying off mortgages early.
New homes eligible for the program would have a price limit of about $1 million in much of the state – or $1.5 million in higher-price regions such as the Bay Area and Orange County. It’s unclear how many buyers would be approved for the program, but at $25 billion, the figure could reach 150,000.
If passed by voters, the California Housing Finance Agency (CalHFA) would manage the Middle-Class Homeownership Program. CalHFA manages the hugely popular Dream For All mortgage-assistance program and oversaw Keep Your Home California.
So far, the act has bipartisan support, especially since housing is the biggest issue for a large majority of Californians. But opponents will undoubtedly emerge, like most issues in California.
“I grew up in a California where working families could afford to buy a home,” said United Brotherhood of Carpenters and Joiners of America General President Doug McCarron. “It’s time to build our way out of this homeless and housing affordability crisis. Affordable homes for working families builds their future and builds California’s future.”
Who might qualify for middle-class homeownership program and the latest median home price
| County | Possible income limit (2x median income) | Median home price in March |
|---|---|---|
| Los Angeles | $180,224 | $828,300 |
| San Diego | $215,536 | $1.05 million |
| Orange | $232,578 | $1.47 million |
| Riverside | $186,148 | $643,740 |
| San Bernardino | $170,956 | $502,600 |
| Santa Clara | $328,562 | $2.15 million |
| Alameda | $258,734 | $1.36 million |
| Sacramento | $184,350 | $550,000 |
| Contra Costa | $254,458 | $870,000 |
| Fresno | $148,402 | $434,400 |
| Kern | $140,420 | $413,000 |
| Shasta | $145,272 | $407,250 |
Source: U.S. Census Bureau and the California Association of Realtors
