The California Association of Realtors (CAR), the California Building Industry Association (CBIA), and Habitat for Humanity California have joined together to urge lawmakers to make additional investments in this year’s state budget to encourage developers to build more homes across California.
This is the only way, they insist, to solve two of the state’s most stubborn problems: a critical housing shortage and a general lack of affordable housing.
Those three organizations, along with a coalition of homebuilders, racial justice activists and homeownership advocates, are also calling for investments in the budget to address the racial gap in homeownership by increasing the housing supply at every income level.
Black and Latinx households are priced out of the market disproportionately, a CAR. representative said. The median sales price of a home in California surged past a record $813,980 in April, and housing production stalled for the second consecutive year in 2020.
“California desperately needs more housing to meet the needs of diverse middle-class and low-income Californians,” Dave Walsh, president of CAR, said during a virtual news conference on May 20. “With a historic budget surplus, now is the time to address the racial divide in homeownership and fix California’s severe housing shortage.”
As home prices in California continue to set record highs, and only one in four Californians able to afford a home priced at the median cost, investments in new housing supply would address severe disparities in homeownership and reverse decades of exclusionary housing policies, CBIA, CAR., and Habitat for Humanity California said in a joint statement.
In February, CAR reported that housing affordability for the average Black household in California is 50% worse than that of their White counterparts. Less than one in five Black California households were able to buy a $659,380 median-priced home in 2020.
“To achieve the housing we need, our state must make the investment in creating housing opportunities for working Californians to access all forms of stable homeownership,” said Michael Gunning, Senior Vice President of Legislative Affairs for CBIA. “To close the racial homeownership divide, we must address segregation caused by explicit, historic government policies at the local, state, and federal level.”
That figure is compared to two in five White households in the state who could buy the same dwelling. A minimum annual income of $122,800 was required to make a monthly payment of over $3,000 on a fixed-rate mortgage.
Homeownership is a key element to building generational wealth and it helps to stabilize communities. Homeownership rates are at their lowest in California since the 1940s. Black and Latinx households are twice as likely to rent properties as White Californians.
CBIA, CAR, and Habitat for Humanity California say that the record state budget surplus this fiscal year creates a historic opportunity to address California’s housing crisis and invest in more housing inventory across the state.
Of the $9.3 billion allocated to housing in Gov. Newsom’s proposed May Revise budget, only $725 million, or less than 8%, goes toward expanding homeownership opportunities with programs such as down payment assistance, CAR points out.
“It is time for California to lead through action in Sacramento to address these painful truths about past housing policies and create a new housing future that works for everyone,” Gunning said. “That can start with the budget investments we’re calling for today.”
The groups are requesting for additional budget investments in a number of areas that would create opportunities to expand the housing inventory in the state, including matching grants and tax credits to complement those proposed by the Biden Administration; tax credits for first-time and low and moderate-income buyers; and incentives to increase construction.
“This is about the future of our state. This is about keeping more Californians from being cost-burdened and falling into homelessness,” Walsh said. “It’s about creating true housing equity for all Californians. Let’s come together to prioritize more ownership housing — it’s the right thing to do to ensure the American dream of homeownership doesn’t slip away for Californians who call the Golden State home.”