Requests for California’s new deposit aid program, “Dream for All,” depleted its $300 million budget in 12 days. The housing credit agency stopped accepting submissions on April 7.
In 2021, Assembly Bill 140 created the program to subsidize up to 20% of low-income first-time homebuyers.
The Dream for All Shared Appreciation Loan covers part of the down payment in return for a piece of the property, which will be repaid with a percentage of the home’s appreciated value upon selling.
Here in crazy California, this is happening. My 4 year old is going to own a home on the back of the taxpayer, me! https://t.co/vDS4sqa32a
— Hans Grüber (@nanders777) April 21, 2023
Senate President Pro Tempore Toni Atkins (D-San Diego) praised the initiative, saying it helped almost 2,400 first-time homeowners in its first two weeks.
The lowest qualified earnings for the scheme are $159,000 in multiple municipalities across the state. Inhabitants from San Francisco and Silicon Valley homeowners in Santa Clara and San Mateo are eligible if they make $300,000.
The highest earnings limit in Southern California is $230,000 in Orange County, while Los Angeles’ limit is $180,000.
The first plan was to spend $1 billion annually for 10 years to help over 150,000 Californians.
Due to a $25 billion budget shortfall for the fiscal year commencing in July, Governor Newsom cut the projected amount to $300 million in 2023. Thus, the program waits for funds.
Thousands of entry-level homebuyers applied for the program, which reserved all funds in two weeks.
Nevertheless, with the program structured to work only with growing property values, California’s real estate market has some analysts warning that dropping prices may put taxpayers and the state’s investments in danger.
Most counties have had declines in pricing and double-digit sales volume. Mortgage-backed securities worry real estate professionals too. Experts warn that similar notions led to the 2008 banking and mortgage lending catastrophe.
California Dream For All Becomes a Nightmare https://t.co/nbOQvDG85R
— Bill Gross (@BillGrossEXP) April 17, 2023
The housing finance agency responded by offering first-time homebuyers (earning more than 20% less than the area’s mean salary) a Forgivable Equity Builder Loan for up to 10% of the purchase price.
If purchasers stay in residence for five years, these monies are not reimbursed. Atkins said continuous financing is needed to unlock doors to generational wealth for Californians, especially those who have experienced structural impediments to homeownership.This article appeared in The Political Globe and has been published here with permission.