By MADISON HIRNEISEN
THE CENTER SQUARE
(The Center Square) — In an effort to make homeownership a possibility for more California residents amid rising prices, a new proposal from a top Senate lawmaker would spend $10 billion on over the next decade to help families buy homes.
Senate Pro Tempore Chairman Toni Atkins, D-San Diego, unveiled a new proposal On Wednesday, that would provide 17% of a home’s purchase price for first-time home buyers – a move officials say could cover the down payment and potentially cut mortgage payments by a third. The program — dubbed the “California Dream for All” program — is limited to homebuyers who earn up to 150% of their regional income.
Senator Atkins is proposing $1 billion per year starting in the 2022-23 fiscal year for the program, with ongoing allocations of $1 billion for 10 years. The funds would establish a “renewable shared appreciation first home purchase program,” according to a budget committee report.
Senator Atkins’ proposal comes as California eyes a potential surplus of $68 billion, up from a January forecast of $29 billion.
The statewide median home price in California was $771,270 in February of this year, according to the California Association of Realtors. Homeownership is at its lowest level since 1940 in California, according to a budget committee report, as rising prices make buying a home out of reach for many residents.
“Everyone should have the opportunity to achieve this dream and invest in their family’s future,” Senator Atkins said in a statement. “The California Dream for All program will give more people the opportunity to break free from the rental cycle, become the first members of their family to own a home, and allow more people to put their children and grandchildren on the road to success. . It has the ability to change people’s lives.
Lawmakers estimate the proposed funding would support more than 8,000 first-time home buyers a year, which a budget report says is ‘enough to benefit a significant number of buyers, but not enough to further increase house prices.
Officials pointed to the program’s “recyclability” during a budget hearing on Wednesday, telling lawmakers that when a homebuyer sells, transfers or refinances the home, the state would be reimbursed 17% of the the increase in the value of the house, which would be recycled to help new home buyers.
Proponents of the program estimate that it will help 157,200 families over 40 years, or 32,000 more than a 3% simple interest program. It is also estimated to generate wealth for borrowers of $133.8 billion, about $13.2 billion more than a 3% simple interest program.
Reports of the proposal were quickly met with skepticism from critics who questioned the impact this proposal would have on already high home prices in the Golden State. Others noted that California faces a shortage of affordable housing.
“The situation facing CA is very simple. Too much money and too many people suing too few homes,” Alex Tabarrok, a George Mason University economics professor and former California resident, told The Center Square in an email. “The solution is also very simple. Build more houses.
“Instead of acknowledging the problem and its solution, California lawmakers insist on subsidizing demand. At best, it will benefit a handful of lucky shoppers who will get cash back at taxpayer expense. At worst, it will fuel housing inflation, meaning the gains will be passed on to already wealthy property owners.
Senator Atkins aims to include this program as part of the 2022-23 budget and is preparing to prepare the text of the budget trailer bill for the June budget deadline.