Installment plan would be handled with Devil – Orange County Register
With the state running a budget surplus of $97.5 billion, you can be sure California lawmakers are having fun dreaming up new spending programs. One of the more dubious ideas, courtesy of Democratic Senate Speaker Pro Temp Toni Atkins of San Diego, is to create the “Californian Dream for All” program to help Californians buy homes.
As is usually the case, legislators identify a real problem. House prices have skyrocketed. California has the second lowest homeownership rate in the country. Many Californians cannot raise the down payment needed to buy their first home. Prices and mortgage rates are skyrocketing, making buying a home more inaccessible than ever.
As is also usually the case, the legislature offers a “solution” that misses the root cause of the problem – and expands the size of the state bureaucracy. Although details are evolving, the program would issue $1 billion in revenue bonds to create a fund in which the state offers 17% or 20% interest-free loans to cover down payments for homebuyers.
The program would also draw $150 million per year from the general fund budget to pay for its administrative and personnel costs. Sure, struggling homebuyers might appreciate the “free money,” but in that case, they have to sign a deal with the devil — or at least with the state bureaucracy. The government would gain an equity stake.
In its statement, Atkins explains that participants in the program would repay the loan at the time of the sale — but CalMatters notes that the state would also receive “a 20% share of any increase in the value of the home.” You can be sure that the State will not be there to pay 20% of the cost of this new roof.
The program raises other concerns. He will never have enough funding to make a dent in the state’s housing affordability crisis. Critics have noted that this will create political pressure on the state government to “pardon” the installments. Instead of creating expensive programs, lawmakers are reforming the myriad of laws that make it so difficult for developers to build new homes.