The RCJ votes Yes, believing that getting home buyers started in the home ownership experience at least addresses the hope that people can realize this part of the American dream. It only applies to new construction, which is good for the building industry, but does nothing for California’s existing housing (old homes). It creates the probability of suburban expansion and further inflated home prices, and risks further erosion of older housing areas. As with all complicated issues, this Proposition isn’t a panacea fix for California’s housing situation.
Proposition 37 would create a state-administered homeownership loan program for middle-income Californians buying certain newly constructed homes. It would authorize the California Housing Finance Agency to issue up to $25 billion in revenue bonds. Eligible buyers could receive a fixed-rate loan covering up to 17% of the purchase price, while putting at least 3% down. The bonds would be repaid through borrowers’ mortgage payments rather than the state General Fund.
The Pro Argument
Supporters say Proposition 37 addresses one of California’s biggest barriers to homeownership: the large upfront down payment. A buyer who can manage monthly mortgage payments may nevertheless struggle to accumulate tens or hundreds of thousands of dollars for a conventional down payment.
The measure could make homeownership accessible to families earning up to twice their area’s median income, including people who may earn too much for traditional assistance programs. Supporters also argue that limiting the program to newly constructed homes could encourage additional housing construction, potentially creating jobs and increasing the supply of homes.
Another major argument is that Proposition 37 has no direct state or local government cost under the Legislative Analyst’s analysis because homeowners’ payments would repay the bonds.
The Con Argument
The principal criticism is that helping people afford expensive homes is not necessarily the same thing as making housing more affordable. Critics argue that the program could increase buyers’ purchasing power without addressing the underlying causes of California’s high housing costs, such as limited construction and high development costs.
There is also uncertainty about how much the program would actually accomplish. The Legislative Analyst notes that its impact will depend on investor demand for the bonds, the cost of the loans compared with other assistance programs, and whether the program actually results in additional construction and home purchases.
Finally, the program is aimed at new homes, rather than California’s enormous existing housing market, and the loans themselves must be repaid by participating homeowners.
In Brief
The debate over Proposition 37 comes down to whether down-payment assistance can meaningfully expand middle-class homeownership without addressing housing prices directly. Supporters see a self-financing way to help Californians overcome the initial financial barrier to buying a home; critics question whether subsidizing buyers will do enough to solve California’s broader housing-affordability problem. The official voter guide reports that no formal argument against Proposition 37 was submitted.
Supporters
The official voter guide identifies several prominent supporters:
- California State Treasurer Fiona Ma
- United Nurses Associations of California
- California Conference of Carpenters
- California Association of Realtors
- California Teachers Association
- Veterans Affiliated Council
- Xavier Becerra, candidate for governor
The campaign also describes support from construction unions, veterans’ organizations, housing advocates and other labor and business groups. Former California Senate leader Bob Hertzberg, who spearheaded the initiative, is a principal advocate.
Supporters argue that Prop. 37 addresses one of the largest barriers to homeownership—the down payment—without requiring conventional state tax revenues. The program would use up to $25 billion in revenue bonds, with the bonds repaid from participating homebuyers’ mortgage payments.
Opponents
The official Secretary of State voter guide says “Opponents: None submitted,” meaning no formal opposition argument was submitted for publication in the state voter guide.
There is nevertheless organized opposition outside the official guide. Reform California, associated with Republican Assemblymember Carl DeMaio, opposes Prop. 37. Its criticism is that the measure would subsidize purchases of relatively expensive newly constructed homes without addressing the underlying costs that make California housing expensive.
The California Budget & Policy Center, while not taking a position for or against the measure, has also raised questions about whether the program would actually improve affordability for Californians most in need. Its analysis notes that eligible households could earn as much as 200% of area median income and that the program is restricted to newly constructed homes, potentially benefiting households already relatively well positioned to purchase a home.
The basic divide
Supporters see Prop. 37 as a way to help middle-income Californians overcome the down-payment barrier while stimulating new home construction.
Opponents argue that down-payment assistance does not address the fundamental shortage and high cost of housing and could instead increase demand for expensive new homes without making housing substantially cheaper.
One important distinction is that the measure does not simply give buyers $25 billion in taxpayer money. It authorizes revenue bonds, with the loans to homeowners intended to generate the payments needed to repay those bonds. The Legislative Analyst’s summary therefore describes the measure as having no direct state or local costs.