California is the land of dreams and extremes and nowhere is that more evident than in the state’s very low homeownership rate.
According to the Public Policy Institute of California, only 56% of California families live in homes they own, a rate very slightly higher than the lowest rate of 55% in New York and nearly 10 percentage points behind the national rate. by 65%.
“Homeownership has long been a central part of the American dream,” writes the PPIC research team. “It’s the main source of wealth for most families, and in the long run it provides families with more stable and lower housing costs compared to renting.” Yet, primarily due to high housing prices in the state, home ownership is out of reach for many Californians.
That so few Californians live in their own homes should come as no surprise. After all, the state has the highest poverty rate in the nation, and if you add the near-poor, more than a third of the state’s estimated 40 million people live in financial hardship, calculated the PPIC.
Additionally, the state’s median home price of $834,000 – nearly double the national figure – means only a quarter of California families can afford such a home, those with incomes of $160,000 and above. .
In other words, home ownership is another of many clues to California’s highly stratified society — an infinitely ironic one for a state whose political leaders, especially Governor Gavin Newsom, hold it up as a model. of egalitarianism and social mobility that should be emulated elsewhere.
So what, if anything, could be done to increase wealth-generating home ownership? Toni Atkins, the acting president of the state senate, made a crusade of it, citing her personal story while proposing a new agenda.
“Owning a home was out of the question when I was growing up, so I was deeply proud when I was able to buy my 950 square foot home in San Diego when I was in my 30s,” she said. “Everyone should have the opportunity to realize this dream and invest in the future of their family.”
As part of its California Dream for All, the state would partner with select families to make down payments on home purchases and then recoup its investment when the homes are later refinanced or sold.
Atkins’ program would join other state programs that already offer homeownership assistance. And while his sincerity is genuine, his proposal would only help about 8,000 families at best in a state where about 7 million families are renters.
This is typical of politicians’ approaches to social and economic disparities – creating a new agenda with a catchy title that has little, if any, impact and avoids the fundamental problems.
California’s low homeownership rate results from high levels of poverty and exorbitant home prices. Throwing a few dollars at it doesn’t solve the problem and could even make it worse by encouraging some families to buy homes they really can’t afford.
Fifteen years ago, we saw the result of government policies aimed at forcing homeownership. Lenders lowered their mortgage eligibility standards, property valuations were inflated, and when the housing bubble burst, millions of new homeowners faced foreclosures and evictions. It nearly destroyed the country’s banking system and caused what was called the Great Recession, with California being hit harder than any other state.
Homeownership rates in California will rise when the state improves its economic fundamentals – when it removes barriers to housing construction, makes it more welcoming to investment in middle-income jobs, and improves educational outcomes. poor children.
Symbolism such as the Atkins mortgage relief program is welfare governance that changes nothing.
CalMatters is a public interest journalism company committed to explaining how the California State Capitol works and why it matters. For more Dan Walters stories, go to Commentary.