It’s no secret the cost of living in California is unaffordable for many, even middle-class earners.
Proposition 37 on the November ballot promises to change that by helping would-be homebuyers struggling to save up for a down payment, but critics argue its approval could actually drive up prices.
The measure would create a $25 billion fund through revenue bonds, meaning the state will raise the money by selling bonds to investors, so taxpayers wouldn’t be on the hook. It would only apply to new homes.
“It’s basically a second mortgage allowing people up to 17% down payment assistance,” said Gustavo González with the Santa Clara County Association of Realtors.
To be eligible, the buyer must have lived in California for at least a year, live in the purchased home, and earn less than 200% of the area’s median income.
“For example, in very expensive parts of the state, like Santa Clara County, it could be a family of four making up to around $400,000 a year, could still qualify for this program,” political analyst Guy Marzorati said. “The argument around Prop 37 is even folks who are making a lot of money, it’s difficult for them to save up for that down payment.”
Critics say Prop 37 doesn’t actually address the lack of affordable housing and could even drive up prices.
“Under Proposition 37, it’s $25 billion, and that would basically be used to create a California state government mortgage lending program,” Assemblymember Carl DeMaio said. “Basically, the California state government would become one of the largest mortgage brokers in the entire state. I don’t want government being more involved.”
DeMaio also argues developers would be the ones who truly benefit and claims the measure would destabilize the housing system.
“This is not the approach for affordable housing,” he said.
Marzorati said it could all boil down to a partisan preference.
“This measure was placed on the ballot by former state Sen. Bob Hertzberg, who is a Democrat, and on the opponent side we’ve seen a lot of Republicans and kind of conservative groups,” Marzorati said.
