By Otto Catrina, Special to CalMatters
Otto Catrina is president of the California Association of Realtors.
There are growing calls to promote equity for those working Californians who, as a result of this state and nation’s history of discrimination, have higher levels of economic and housing insecurity and limited, if any, intergenerational wealth. California Realtors, Habitat for Humanity and the California Building Industry Association — a housing coalition — echoes those calls to our legislative budget committee leaders working on revising the state budget to allocate a greater portion of the projected surplus to the construction of owner-occupied housing and down-payment assistance programs.
Greater funding will increase equity in the housing market by expanding opportunities for Californians to gain housing security while building equity in a home they own. Study after study shows that homeownership is the best way for working people to attain economic security and develop wealth. One can’t be in favor of eradicating the wealth and economic security discrepancies between groups, particularly for communities of color, without also supporting greater access to ownership housing.
Our state’s leaders have a once-in-a-lifetime opportunity to do something about it. Assemblymember Tim Grayson and 27 other Assembly members — both Democrat and Republican — are calling for $600 million to support homeownership in the 2022-23 state budget, including $400 million for the development of deed-restricted ownership housing and $200 million for the state’s existing down-payment assistance programs.
If we really want to give people the chance to build wealth that will support their families and future generations, we should demand that our government prioritize the development and construction of reasonably priced homes.
Instead of creating a generation of renters — none of whom will have the opportunity to build the type of economic security and wealth-building opportunities older Californians took for granted — we should be giving Californians the opportunity to be homeowners and help them build equity that provides financial security and housing stability. Homeownership creates true economic security, in every sense of the word.
California’s median home price last year was $786,750. That translates into a minimum qualifying annual income of $144,400 and a monthly mortgage payment of $3,610. Such a home is affordable to only 26% of all Californians and just 17% of Latino and Black Californians. When compared to whites/non-Hispanics, the affordability gap is even more stark, with affordability levels for Black and Latino households being half that of whites.
“Who Gets to Call California Home?,” a new report sponsored by the California Center for Real Estate, an institute of the California Association of Realtors, and prepared by Dowell Myers, a University of Southern California professor, finds that “longstanding homeowners accumulate substantial gains in home equity, particularly in California with its history of rapid price gains. That in turn fosters the ability of ‘the Bank of Mom and Dad’ to assist the homebuying of their children. The unfortunate consequence of family assistance is that inequality becomes more deeply entrenched between families with differential resources and between members of racial groups that have stronger legacies of homeownership than others.”
Assemblymember Grayson and his fellow legislators wrote in a formal funding request to the governor earlier this year, saying that “homeownership provides working families with an unparalleled ability to accrue generational wealth and experience housing security, as homeowners pay a fixed mortgage instead of a rent that continually rises.”
The time is now for Californians who desire the benefits of homeownership to contact their state legislators and Gov. Gavin Newsom and demand that they act to increase the supply of ownership housing.
California Realtors have the right plan to start bringing equity to California’s housing market. There’s never been a more important time to do so.