It gets even harder to afford a house in California and it was already expensive.
California lawmakers are now proposing a $1 billion-a-year down payment program for first-time home buyers.
“We just don’t have enough homes for the number of people who want to live in our area and that has pushed prices up,” said San Luis Obispo real estate agent Kim San Jule.
Buying a home is becoming increasingly out of reach for people on the Central Coast and throughout California.
“It’s very difficult for first-time homebuyers. There are a few things, but it comes down to tight supply and, of course, affordability,” said Oscar Wei, deputy chief economist for the California Realtors’ Association.
High demand, the lack of housing and rising interest rates make the situation even worse.
“It seems that since the start of the pandemic, with people’s ability to work remotely, everyone has discovered the Central Coast,” San Jule said. “As you and I know, there is no better place to live.”
The result is a widening gap between the median household income and the money needed for a down payment.
For example, a 20 percent down payment for the average home in California is $160,000. The median household income is only half that, around $80,000.
“What we call the home affordability index — the percentage of households that can afford to buy a home at an average price — has fallen from somewhere around 33% in 2020 to about 20% now in Q1.” said Wei.
The affordability index for housing is expected to fall further to below 20 percent. That is the sharpest drop since the housing market burst before the great recession.
California now wants to help first-time homebuyers with a down payment program called California Dream For All.
“Getting people into the house is great, but we have to read the fine print,” San Jule warned.
The program would give first-time homebuyers 17 percent for their first home. That money would be paid back to the state if the homeowner sells or refinances.
“The California Dream For All program will give more people the opportunity to break free from the renting cycle, become the first in their family to own a home, and enable more people to help their children and grandchildren get started.” to success,” said California Senate Leader Tony Atkins, a San Diego Democrat who is leading the effort.
“A deposit utility is one step,” Wei said. “We’re hoping to build more homes. I think ultimately it comes down to more homes still being built in California.”
Experts say this is a step in the right direction, but it doesn’t solve the main problem, which is a lack of supply for high demand.
“I don’t think it’s going to be big enough to really make a dent,” said Moussa Diop, assistant professor of real estate at the USC Price School of Public Policy. “It will help some people buy a home, but if the program is important enough, prices could go even higher unless the supply can respond.”
The proposal continues to pass through the California legislature as part of the state budget.