California is a land of dreams and extremes and nowhere is this more evident than in the state’s very low homeownership rate.
According to the Public Policy Institute of California, only 56% of California households live in their homes, which is slightly higher than New York’s 55% rate in the lowest country and nearly 10 percentage points behind the 65% national rate.
“Homeownership has long been a central feature of the American dream,” writes PPIC’s research team. “It is the major source of funding for most families, and in the long run provides families with a more stable and lower housing cost than rent. Yet – mainly because of the state’s high housing prices – homeownership remains a challenge for many Californians. out of reach.”
It should come as no surprise that so few Californians live in their homes. After all, the state has one of the nation’s highest rates of poverty and when the near-poor are added, more than a third of the state’s nearly 40 million residents live with financial distress, the PPIC has calculated.
In addition, the state’s median home value of $834,000—nearly twice the national figure—means that only a quarter of California households can afford a home with incomes of $160,000 and above.
In other words, homeownership is one of many indices of California’s highly stratified society—an immense irony for a state whose political leaders, most notably Governor Gavin Newsom, describe it as a model of egalitarianism and social mobility. which should be emulated elsewhere.
So what, if anything, can be done to increase wealth-building homeownership? State Senate Protem President Tony Atkins has turned it into a crusade when proposing a new program, citing his personal history.
“Owning a home was out of the question when I was growing up, so I was very proud when I was able to buy my 950-square-foot home in San Diego in my 30s.” “Everyone should have the opportunity to achieve that dream and invest in the future of their family.”
Under its California Dream for All, the state will partner with certain families to make payments on home purchases and then recoup their investments when the homes are later refinanced or sold.
The Atkins program will join other state programs that already offer homeownership assistance. And while her honesty is genuine, her proposal will only help an estimated 8,000 families in the state where about 7 million families are on rent.
It characterizes the attitude of politicians towards social and economic inequality – create a new program with a catchy title that has little effect, if any, and bypasses the main issues.
California’s low rate of homeownership is a result of high levels of poverty and skyrocketing home prices. Throwing a few dollars at it doesn’t solve the problem and may make it worse by enticing some families to buy a home they really can’t afford.
Fifteen years ago we saw the result of government policies that were trying to force feed house ownership. Lenders lowered their mortgage eligibility standards, property appraisals accelerated, and when the housing bubble burst, millions of new homeowners faced foreclosures and evictions. It nearly destroyed the nation’s banking system and became known as the Great Recession – with California being hit harder than any other state.
California’s homeownership rates will rise when the state improves its economic fundamentals – when it removes barriers to housing construction, makes itself more welcoming to investment in middle-income jobs and increases educational outcomes for poor children. improves.
Tokenism such as Atkins’ mortgage assistance program is feel-good governance that doesn’t change anything.
Dan Walters is a columnist for CalMatters.