New California Plan Would Help Buyers Get Downpayment on First Home

The mortgage assistance plan proposes to help lower and middle income Californians but critics say it’s political window dressing
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California legislators are proposing the creation of a billion-dollar fund to help first time homebuyers with what some say is the hardest part of buying a home—the down payment.

Called “California Dream for All,” the proposal was authored by state Senate President pro Tempore Toni G. Atkins, KTLA reports.

The program would provide 17 percent of the money toward the price of a first home, which in some cases could potentially cover the entire down payment. Homebuyers would also receive mortgage counseling.

Underlying the California Dream for All program, is the idea of “shared equity”—in which the state would partner with families to make down payments on a purchased home, and then recoup its investment when homes are later refinanced or sold. There are other state programs out there that offer homeownership assistance. However, according to CalMatters, Atkins’ program would only help about 8,000 families in a state of 7 million families who are renters.

“The California Dream for All program will give more people the chance to break free from the cycle of renting, become the first in their families to own a home, and make it possible for more people to set their children and grandchildren on a path to success,” Atkins said last month. “This has the ability to change people lives.”

The program intends to create a way for low to moderate families to buy a first home—and they are the group who is most often shut out of homeownership because of skyrocketing home prices.

California has the nation’s second-lowest level of homeownership, at 56 percent. The first place prize for lowest homeownership level in the U.S. goes to New York, at 55 percent, according to the Public Policy Institute of California. For California, according to CalMatters, the reason the rate of homeownership is so low is a perfect storm of high poverty and astronomical home prices.

“Given that the current median price of a first-time home in California exceeds $590,000, conventional down payments of 20 percent have become unrealistic for far too many in the Golden State,” California State Treasurer Fiona Ma told KTLA.

While $590,000 is the median price in 2021, the average price paid by a first-time homebuyer is $712,040. Only 26 percent of households in the state can afford to buy a home in the median price range.

“Homeownership has long been a central feature of the American dream,” Public Policy Institute of California’s research team writes. “It is the leading source of wealth for most families, and over the long run provides families with more stable and lower housing costs compared to renting. Yet—primarily because of the state’s high housing prices— homeownership is out of the reach of many Californians.”

California’s homeownership will rise when it makes major structural and economic changes, like removing blocks to construction, investing in middle-class jobs, and improving the education of poor children, wrote CalMatters, while deeming Atkins’ mortgage assistance plan as mere “tokenism” and “feel-good governance.”


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