For decades, I’ve sat on the dais in hearing rooms, listening to what Californians need and hearing about the obstacles that stand in their way. Over and over again, the conversation centered around a common theme: Californians cannot afford to buy homes.
Inflated pricing coupled with the rising cost of living have made it nearly impossible for nurses, teachers, veterans and small business owners to buy a home.
Californians are the most innovative people on the planet with access to state-of-the-art technology, top-ranked universities and burgeoning research across industries. But yet, somehow, we’ve lost the plot on what matters the most: the security of a home and the comfort and safety that comes along with it.
That’s why I’m proud to be the proponent of Proposition 37, which unlocks homeownership for more middle-class families by making it possible to buy a new home with just 3% down, while spurring a wave of new home construction across the state – all at no cost to taxpayers. Despite confusing arguments laid out by this paper’s editorial board, Prop 37 is a straightforward solution that will put more roofs over more heads, plain and simple.
The median home price in California is $800,000 and the traditional downpayment requirement is 20 percent, meaning the expectation is roughly $160,000 just to get in the door, so to speak. In Los Angeles County that number is $176,000 and in Orange County, the figure jumps to $211,000. Those staggering figures will take a family with a medium income more than twenty years to save. But under Proposition 37, qualified prospective homeowners could save the 3 percent in less than five years. That is still real money and real commitment, but it is within reach of a family disciplined enough to save and otherwise ready to buy.
See also: Editorial board recommends a No on Prop. 37
I’ve been around long enough to distrust anything that sounds too good to be true, so when consulting with housing experts and industry professionals, I knew it was important to get the financing right, and we did.
First, Prop. 37 uses a state revenue bond, not a general obligation bond, and the distinction matters. Both the nonpartisan Legislative Analyst’s Office and the Department of Finance have made it clear: Proposition 37 comes at no cost to taxpayers. The bonds must be fully repaid by investors and home borrowers. There is no general fund backstop and no surprise bill waiting down the road.
The second component that was critical to making Proposition 37 a success is tackling the state’s housing supply. I have argued for years that helping people buy without helping build only bids up prices.
Prop. 37 addresses this directly by encouraging new single-family construction. Housing analysts project that the initiative could spur more than 190,000 new homes, which means more inventory for buyers and work for the workers who build them, along with economic activity across the state.
Finally, we needed to create a policy that would have built in accountability. Prop. 37 is not a blank check. Borrowers must be California residents, meet income requirements, put down at least 3 percent, make their monthly payments, and live in the home as their primary residence.
The program is subject to annual state audits, and it includes consumer protections such as strict limits on bank fees and no penalty for paying off a loan early. Families who buy through this program should be treated fairly, and the measure says so in writing.
Nothing will solve California’s affordability crisis overnight. We need more housing of every kind, at every price point in every market across the state. But Prop 37 is a step in the right direction and will give tens of thousands of hard working Californians the chance to rest their heads under a roof that they own.
Proposition 37 offers middle-class Californians a real chance to put down roots, build equity, and stay in the communities they serve. After all these years, I know a workable solution when I see one.
Robert M. Hertzberg is the former Speaker of the California Assembly and California Senate Majority Leader