Image by Paul Brennan from Pixabay
May 26, 2022 - SACRAMENTO – Home ownership for low- and moderate-income Californians became closer to reality today after the California Senate approved a Sen. Bob Hertzberg plan to establish a $25 billion voter-endorsed general obligation bonds.
Senate Bill 1457 now goes to the Assembly for consideration.
“California remains the epicenter of the American housing crisis,” said Hertzberg, Senate Majority Leader Emeritus, said after the bipartisan, 28-to-7 vote sent SB 1457 to the Assembly for consideration. “The underlying problem is simple: A lack of supply. My plan tackles this problem head on.”
As written, SB 1457 establishes the California Family Home Construction and Homeownership Bond Act of 2022, which, if adopted by voters on the November 2022 ballot, authorizes the issuance of $25 billion in general obligation bonds to finance homeownership opportunities and promote new home construction.
Specifically, SB 1457 proposes to use the bond proceeds to create two financing programs, to be run by the California Housing Finance Agency, to address housing access and equity, remove systemic barriers to homeownership, stimulate the construction of new housing, and create wealth-building opportunities for Californians historically left behind. Included would be $18 billion for mortgage loans for first-time buyers and $7 billion in infrastructure loans for new home construction.
Records show that one in five California households spend half or more of their income on housing, the median cost of a home is now in excess of $750,000 – more than two times the national average – and the state ranks 49th in the nation for homeownership with a rate of 54 percent. California produces fewer housing units per capita than any other state other than Utah.
As a result, many renters of all income levels – but especially those of low-and moderate- income – view homeownership as an unattainable goal. The once standard buildup of a conventional down payment of 20 percent of the home price is unrealistic for ordinary Californians. Left even further behind are underrepresented communities already impacted by generational barriers to homeownership due to systemic racism and inequality.
Also priced out of the market are younger Californians – especially those burdened with substantial student debt. The average California home now costs more than seven times the median income for 25-to 34-year-olds compared to a cost of only three times the median income for this demographic in 1970.
“California policymakers have a responsibility to create more opportunities for first-time or left-behind homebuyers,” Hertzberg said. “Purchasing a home, attaining a middle-class lifestyle and building generational wealth cannot be accomplished without addressing the severe lack of housing production that is fueling the state’s homeownership crisis.”
Source: Senator Robert Hertzberg
