California to help first-time home buyers with a down payment

SACRAMENTO—Lawmakers are raising money for a billion-dollar proposal to help first-time homebuyers cover their down payment, as part of the 2022-23 state budget signed by Governor Gavin Newsom on June 27.

Proposed by California Senate President Pro Tempore Toni Atkins (D-San Diego), the “California Dream for All” program would help pay 17% of home prices to make homeownership more affordable for first-generation owners.

“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,” Atkins said in a statement last month.

The program requires the state to invest $1 billion per year for ten years, which has been included in the state’s $300 billion legislative budget.

TO “[make] the state’s homeownership landscape is more equitable, inclusive and accessible to Californians,” the program could cover all or most of the down payment, allowing low-income buyers to forgo expensive mortgage insurance, Atkins said. Each eligible buyer can save up to approximately $1,000 per month.

However, when the homeowner refinances or sells the home, the portion of the home’s value originally covered by the state must be paid back. The funds will be reinvested in the program to help more buyers buy their first home, according to Atkins.

Strong supporters of the program include California State Treasurer Fiona Ma and some real estate organizations.

“Given that the current median price for a first home in California exceeds $590,000, conventional down payments of 20% have become unrealistic for far too many people in the Golden State,” Ma said in the statement.

California Association of Realtors President Otto Catrina said: “[h]Property is a key element in securing housing and economic security for California workers, creating intergenerational wealth, and creating stronger communities in our state.

However, some experts said government funds would make homes more unaffordable in California.

Jim Righeimer, a real estate developer and former president of the Huntington Beach Fountain Valley Association of Realtors, said the program would increase demand in the housing market, which would drive up home prices.

“It’s complete economic illiteracy, to think that giving people free down payments for homes could do anything but drive up the cost of homes even more, Righeimer told The Epoch Times.

Agreeing with Righeimer, Moussa Diop, an assistant professor of real estate at the University of Southern California’s School of Public Policy, said higher demand means higher prices unless there is have enough supply.

“It’s going to help some people buy a home, but if the program is large enough, it can drive prices up even more unless supply can meet,” Diop said. KSBY last week.

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