With buying a house in California increasingly out of reach for many, a new report shares a blueprint for one of the state’s newest and largest programs to promote homeownership and make the creation of generational wealth possible for more Californians.
The report — produced by CA FWD, in consultation with the State Treasurer’s Office — lays out the framework for the innovative California Dream For All program, which aims to help many first-time homebuyers and buyers in communities historically locked out of the market to get over a major hurdle of buying a home — securing a significant down payment.
|Read the full report: California Dream For All: A Proposed Shared Appreciation Loan Investment Fund For The State Of California|
This problem for first-time homebuyers has become more acute: In 2021, a 20% down payment on a median price home would total $119,000 which represents one and half times the amount that the average household in California makes in a year.
Accessing homeownership and making a large down payment is often even more difficult for low-income communities and communities of color. Black and Latino households are far less likely to receive down payment assistance than are White households, and the percentage of home loans going to Black and Latino families are both approximately 20% lower than their shares of the population.
The California Dream For All program uses a shared appreciation model that gives the state the ability to invest its budget surplus into a revolving investment fund, called the CA Dream Fund. The Fund would allow the state to invest in loans alongside first-time homebuyers to help them buy a house in any region of California.
The value created through appreciation will help new homeowners in California for decades to come, with loan payoffs going toward helping more future borrowers.
While it won’t on its own solve the home affordability and supply problem in every region, the California Dream For All program model could be linked to other reforms in order to increase housing supply.
“The number one thing that we need to do in California is build more homes,” said CA FWD CEO Micah Weinberg on a recent California Dream For All webinar also featuring State Treasurer Fiona Ma and California Community Builders CEO Adam Briones. “And that’s a process. And we can’t wait until that process has played out to get folks into homeownership who had been locked out of this market.”
|Watch the full California Dream For All Webinar with CA FWD, State Treasurer Fiona Ma and California Community Builders.|
The new report gives detail on:
- An exploration of the barriers to affordable homeownership facing Californians
- Explanations on the value of the shared appreciation loan model
- A blueprint for the comprehensive program
- Methods to safeguard state resources
- Recommendations for outreach, implementation and keeping equity at the center of the program.
Two of the equity-based recommendations involve prioritizing disadvantaged communities, including previously redlined neighborhoods and historically marginalized groups, and building equity analysis into the program and its evaluation.
The recently signed state budget includes $500 million dedicated to California Dream For All and the goal for the program is to raise that to $1 billion per year.
Assuming a rate of price appreciation that matches the last 40 years in California, assisted homebuyers would gain $134 billion in wealth—a return that represents nearly six times the taxpayer cost of capitalizing the Fund.
And for the Californian families who will benefit from the program, the return is shaping up to be an accessible path to build wealth for generations to come.
In partnership with California Community Builders, a public policy organization dedicated to building power for communities of color, along with real estate and municipal advisors HR&A Advisors and CSG Advisors, the State Treasurer’s Office and CA FWD developed the California Dream For All homeownership program, which was included in the legislative budget by Senate Pro Tem Toni Atkins.
The foundation needed to scale up to the CA Dream For All Program was built through the support of Wells Fargo and the Regions Build Together Housing Agenda and the Chan Zuckerberg Initiative and the Building Racial And Economic Equity Through Home Ownership Report. The research, data, and recommendations included in both of these reports was identified through California Forward’s annual California Economic Summit and the diligent work of the Summit’s Housing For All work group, which is committed to creating wealth through racial and geographic equity in affordable home ownership.