There’s no better way to express California’s reputation as the land of dreams and extremes than by looking at the state’s low homeownership rate.
Despite New York’s lowest-in-the-nation 55% ownership rate, California’s rate of 56% is somewhat higher than the national average of 66%, according to the Public Policy Institute of California.
Research from PPIC shows that home ownership has long been an important part of the American ideal. Over time, it gives families greater stability and lower housing costs than renting compared to owning a house.” The high cost of housing in California means that home ownership is out of reach for a large number of the state’s residents.
Few Californians own their own homes, which is understandable. If you take into account the almost 40 million people who live in New York, PPIC calculates that more than a third of them are in financial trouble.
California’s typical home price is nearly double the national average at $834,000, meaning that just a fifth of families earning $160,000 or more per year can buy such a property.
Ownership is therefore yet another indicator of California’s extremely stratified society, making it all the more absurd in light of Gov. Gavin Newsom’s frequent praise of the state as a model of equality and social mobility that should be imitated by other states.
Is there anything that can be done to encourage people to buy homes so that they can generate wealth? With her background in mind, Toni Atkins, President Pro Tempore of the State Senate has made it her mission to bring about change.
The idea of buying a house in my 30s was unfathomable to me as a child, so I was thrilled when I was able to purchase my 950-square-foot San Diego home,” she gushed. Achieving that aspiration and investing in the future of one’s family should be available to everyone.
As part of her California Dream for All plan, the state would work with some families to make down payments on home purchases and then return its investment when the homes are refinanced or sold.
There are currently several state programs that aid people in buying a home, and Atkins’ plan would be an additional one. At the very least, her idea will benefit an estimated 8,000 families in a state where around 7 million families rent.
When it comes to addressing social and economic inequity, politicians typically start with a gimmicky new initiative with a catchy name that has little or no influence at all.
Poverty and high property prices are to blame for the low homeownership rate in California. Giving a few bucks here and there won’t help and may even encourage families to buy homes they can’t afford, making the situation even worse.
We experienced the consequences of government programs aimed at promoting home ownership fifteen years ago. When the housing bubble burst, lenders dropped their qualification rules for mortgages, appraisals were inflated, and millions of new homeowners found themselves facing foreclosure and eviction. One of the worst financial crises in American history, the Great Recession, occurred as a direct result of the financial crisis.
When the state’s economic fundamentals are improved — when barriers to house building are removed, investment in middle-class jobs is more welcome, and educational achievements for low-income children are improved — California’s homeownership rates will climb.
Atkins’ mortgage help program, for example, is a symbol of good governance that accomplishes nothing.
CalMatters is a non-profit media organization that aims to educate the public on the workings of the California state legislature and why it matters. Visit calmatters.org/commentary for more Dan Walters stories.