California wants to help Californians — especially middle-income buyers and first-time buyers locked out of the housing market — buy a home, and it’s willing to put money into it.
Even better, a new program, California Dream for All, will not destroy the housing market and will function as a self-sustaining fund for generations to come.
The program would use a shared esteem model to enable home ownership and generational wealth creation. In this model, the home buyer shares a percentage of the home’s appreciation with the lender.
It is not a housing subsidy program, but a way for the state to set up a revolving investment fund, ideally overseen by a board of directors and directed by the state treasurer. The revolving fund would allow funds to be recycled for the benefit of future homebuyers.
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This fund would allow the state to invest alongside first-time homebuyers so they could afford to buy a home in California. The program is designed to support homebuyers across the state in both high and low cost areas and to help realize that dream in all regions of California.
Unlike the lending practices that led to the bursting of the housing bubble in 2007, this program would reinforce sound lending practices by using approved commercial lenders through a stake in the consumer’s home purchase.
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The value created by appreciation would help new California homeowners for decades to come. With an initial investment of $500 million in general state budget funds to establish the California Dream for All program, the state would help generate about six times more household wealth for low- and middle-income homebuyers while maintaining mortgage loan repayments that would go towards supporting future borrowers.
This program would create a long-term solution where all mortgage payments would be reinvested for future homebuyers. With this structure, the state would face limited financial risk as the funds would be reinvested, eliminating the need for additional financing.
According to recent data from the California Dream Index, the homeownership rate is 35% for Black families and 44% for Hispanic families. White families have a 59% home ownership rate. The index developed by California Forward maps 10 economic indicators. Ensuring that housing is accessible to California families in every region has been one of California Forward’s areas of action.
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Once implemented, the program would immediately become the largest in the country, creating an equity-focused, scalable model for the rest of the country. In recent months, California Forward has led the design and development of the program framework in consultation with the State Treasurer’s Office, Pro-Tempore State Senate President Toni Atkins and other key stakeholders.
Other lawmakers, including state Senator Bob Hertzberg and Member of Parliament Buffy Wicks, have helped push for expansion of housing and homeownership. California Dream for All was developed in partnership with California Community Builders, a public organization.
The program would complement the country’s existing home equity systems and programs, and while it won’t solve the homeownership problem for every Californian in need, the fund is expected to create about $48 billion in home loans over 40 years, which would help homeownership for more than 150,000 homebuyers a reality.
Justice is a term that is often used, but there is seldom any real action behind it. The California Dream for All program shows us how we can truly achieve justice across the state — by allowing borrowers to receive equity from winning their home — so everyone can achieve the California dream.
California Forward and the State Treasurer’s Office are thrilled that Legislature and Governor Gavin Newsom included the California Dream for All program in the state budget. We look forward to using this program to advance the framework we are developing. We believe it will add value to both the state and homebuyers and help make homeownership within reach of more Californians.
Fiona Ma is Treasurer for the State of California. Micah Weinberg is CEO of California Forward, a nonprofit that leads a nationwide movement to improve government.