Homeownership is a foundation for economic progress and equity, it is in fact the greatest factor to building generational wealth. But in California the path to owning a home has hit a major roadblock and is increasingly unattainable for many. This became even more evident as the country withstood a global pandemic, bringing to light the millions of people who lacked stable, affordable housing. To respond to the housing crisis, we must create more opportunities for ordinary Californians – increasingly people of color – to become homeowners by fostering the production of quality, affordable homes to meet the housing demand.
As it stands, the odds are working against even middle-income Californians at every step towards homeownership. People of color have been systematically excluded from wealth-building opportunities for generations through redlining and ineligibility for VA loans. Further compounding the issue, the state has not built enough housing, and prices of construction and the cost of buying a home continue to increase. Nearly 1,300,000 low-income California renters do not have access to an affordable home. With Californians, and particularly people of color, facing unprecedented rent burden, saving for a down payment is no small feat, often years in the making. Most people of color in California do not realize homeownership in their lifetime.
With housing supply at a critically low point, Wall Street investors like Invitation Homes have publicly admitted to bidding up housing in areas where community members oppose new construction, capitalizing on NIMBYism and increasing the cost of rent in the process. Currently, over 500,000 housing properties in California are owned by corporations – 250,000 are owned by entities that own 10 or more properties. While there is certainly an important role that corporate landlords can play in solving our housing crisis, it is critical that corporations and pension funds are not blocking Californians from homeownership by buying out inventory, sometimes entire new neighborhoods, as part of a professed profit strategy that is sweeping across the nation.
The lack of housing supply gives corporations and institutional investors a hall-pass to purchase single-family homes, thus decreasing access to ordinary buyers, and forcing low- and middle-income individuals to rent at ever increasing prices; ultimately eliminating the possibility of saving for a down payment, and harming people of color disproportionately. Less than a fifth of Black Californians can afford to buy a median-priced home in the state, while white Californians are twice as likely to be able to afford a median-priced home. California needs to do more to make homeownership accessible for everyone, and one way is to impose an excise tax on large corporations purchasing single-family homes and creating loan programs and pools to help first-time homebuyers.
Our communities deserve a fair playing field – an honest approach to development – where ordinary families who plan to move into the homes they buy have a fighting chance to build wealth. This includes building accessible homes in high opportunity neighborhoods and allowing subdivision of land, reeling in the “wild west” speculation of big, institutional investors, and incentivizing homeownership for all Californians. Policies like these will put people first, giving first-time buyers and other working families a fighting chance for homeownership.
Mike A. Gipson is a Democrat representing Carson in the state assembly.