California Will Help First-Time Buyers With Down Payment (low income, sale)

[JGC97]

Okay. Don't get upset. It's not what it appears. It's not a handout. It's not free money. It's more like a hand up that will be repaid back to the state.

The program comes with several income qualifications, but it's very simple. The state will give first-time buyers 20% of the home's cost to help with the down payment. When the homeowner then sells the house, the state gets a portion back and, in turn, uses that money to help out the next first-time buyer.

https://www.kcra.com/article/califor...ments/43414284

First-time home buyers are finding it difficult to save that 20% down payment so the state giving them some assistance. When the home is sold, the state will re-coup that money or a very large portion of it.

It will operate much the same as anyone who receives Medi-Cal insurance. In this case, having actual assets, i.e. a home to sell, will guarantee the state gets back some of its investment. With Medi-Cal, you have have assets in an estate before the state can re-coup money paid in healthcare costs.

For the times we live in today, I guess this is a good thing. I remember all too well how difficult it was to save for that down payment but how good it felt when we could finally buy our first home. I hope those who receive this sort of help will appreciate it and remember they will be required to reimburse the state when they sell and move up to another home.

Dare I ask this?

What do YOU think of this program? Good? No good?

Be nice

[GuyInSD]

Pretty short on details:
"California Dream For All Shared Appreciation Loan
The Dream For All Shared Appreciation Loan is a down payment assistance program for first-time homebuyers to be used in conjunction with the Dream For All Conventional first mortgage for down payment and/or closing costs.
Upon sale or transfer of the home, the homebuyer repays the original down payment loan, plus a share of the appreciation in the value of the home."

That entire blurb is based on the assumption that there will be equity (and lots of it) when the house is sold again, as if real estate crashes and people walking away from their houses don't happen.
Will the buyer still be liable for repayment if the house drops in value, and there is no equity?

Giving free things to people who have no skin in the game usually does not end well.

[Trekker99]

How is the state 'seeding' this pot of money?

You'd have to start with a large sum to kick this off, and then wait for the owners to start selling.

Sounds like free stuff to me, with my money.

[JGC97]

I know it sounds like it's free money but it is paid back to the state, as I said in my OP and the 300 million will be coming from the state, which essentially is coming from you and me. It always comes from us.

I don't think there's any reason to think home prices won't continue to rise. Except if we have another housing crash like we did in 2008. Yet, all those homes that sold then have appreciated in value again and are worth more than they were before 2008 so why wouldn't this work, too?

I would much rather have my tax money going to people who want to buy a home but can't quite reach that 20% threshold than I would for cities to construct injection sites for junkies. At least that sort of investment by the state would give them some return, unlike other programs that are just wasteful.

Maybe I should have included a poll in my OP. Next time.

[Finper]

I thought Ca was billions in the red? If Ca is known for anything it’s that people hold on to their homes forever. What if you never sell your home?

[JGC97]

Originally Posted by Finper

I thought Ca was billions in the red? If Ca is known for anything it’s that people hold on to their homes forever. What if you never sell your home?

At some point, the home will be sold. No one lives forever and when ownership changes hands, the money (or part of it as described in the program) will be returned to the state. Moreover, the thought that someone would actually stay in a home for the remainder of their life means they were able to finally buy a home. Right now, many can't do that because they're chasing the elusive down payment dream.

No?

I may be wrong and maybe I don't look at things like others do but providing a hand-up, not a permanent hand-out, is not a bad thing. I know if my children were first-time buyers and needed that, I'd like to see them have something like this that would help them get their foot in the door. Not all parents can afford to give their child(ren) that money for a down payment.

[sav858]

Well it’s probably more efficient than trying to build for-sale affordable housing. I’d rather see them do this than try building affordable housing.

[Trekker99]

Originally Posted by sav858

Well it’s probably more efficient than trying to build for-sale affordable housing. I’d rather see them do this than try building affordable housing.

Agreed.

I want limited housing so my house increases in value so I can sell it at a premium when I leave the Socialist Republic of California.

[mgforshort]

I can see this working if the applicants have an impeccable credit history, decent jobs, no run-ins with law enforcement, and preferably married ( for the sake of stability).

For the repayment part, add a suitable amount to their property tax, something they can afford.

If we turn it into another welfare program for the "disadvantaged" it will crash like the billions we lost during Covid to help the criminal classes.

[Igor Blevin]

Creating artificial demand during a housing shortage. Bad timing, if nothing else.

The first time market is already hyper competitive with the most inadequate inventory. The net effect will be to raise entry-level home prices further, making things even harder for the rest of the first-time home buyers.




Beyond that, I will just guess the program will target low income candidates in minority communities.

Of note -- it is 7% interest rates that are as much an impediment to first time home ownership today, as much as it is difficulty scraping up a down payment. At 3%, that was not the case.

The real risk is foreclosure among some owners. Gifting someone 20% down is like having a no-downpayment loan. In either case, you have none of your own money at risk. If you walk away from the home, you have not lost a penny but the state of California loses the money in a foreclosure sale.