After three decades of watching home prices spiral beyond the reach of working families, California voters will finally be asked this November to do something substantial about it. Two ballot measures — Proposition 37 and Proposition 1 — together authorize $36.25 billion in bond financing to put real money into the hands of first-time buyers and to build the affordable housing the state has chronically underbuilt. The coalition behind them is the broadest the state can field: the California Association of Realtors and the labor unions, the housing practitioners and the working families in the same room for once. This is not a “racket.” It is the most ambitious housing intervention any state has attempted in a generation, and it deserves to pass.
Consider what Proposition 37 actually does. The California Housing Finance Agency would issue $25 billion in bonds for second-mortgage down payment assistance on newly constructed homes. Buyers could receive as much as 17% of the purchase price — meaning a household could become a homeowner with as little as 3% out of pocket. Households earning up to 200% of an area’s median income could qualify for homes costing as much as $1.5 million. In Silicon Valley, where the median income for a family of four sits around $400,000, that ceiling is not a giveaway to the wealthy. It is a recognition that “middle income” in coastal California is a category stretched thin by a decade of underbuilding, and that the assistance has to actually reach the people it was designed for — the nurse, the teacher, the firefighter, the line worker priced out of the town they serve.
The familiar objection — that the program is “misleading” because bonds are involved — mistakes the structure of the deal, and it also gets the alternative wrong. The federal government already backs low-down-payment mortgages, and the federal terms are punishing. The Federal Housing Administration insures mortgages with 3.5% down, but the borrower pays an upfront premium of 1.75% of the loan amount plus an annual fee of roughly 0.55% for the life of the loan. Fannie Mae guarantees mortgages with as little as 3% down — at higher interest rates and higher insurance premiums. California’s program is the upgrade. By stacking a state-backed second mortgage on top of the primary loan, the buyer reaches an effective 20% down payment and qualifies for a meaningfully lower rate. The state loan is the lever that unlocks the better mortgage.
Yes, taxpayers stand behind the bonds. That is what taxpayers are for. And the arithmetic of the bonds themselves works: the state issues roughly thirty-year tax-exempt muni paper at around 5.7%, then on-lends the proceeds to qualified buyers as a second mortgage at rates those buyers can actually carry. When California voters approved $12 billion in affordable housing bonds since 2018, and when the general fund has spent close to $20 billion on housing and homelessness, the answer to the question “did it work?” is not to stop. It is to scale what works and abandon what doesn’t. Proposition 1, with its $11.25 billion in new multifamily and homeless housing bonds, is the scale.
The argument that subsidies “push up prices” treats a symptom as the disease. Prices are what they are because the state has built roughly half the housing it should have over the past two decades. Every California family shut out of homeownership today is paying the bill for that underbuilding in the form of rents that consume half their paycheck, doubled-up households, and a generation locked out. Putting $25 billion behind new-construction down payment assistance is not a price-inflating move. It is a supply-side act: the assistance is exclusively for newly built homes, which means every assisted buyer pulls a new unit into the market. Demand subsidy and new construction, paired, are how a state catches up after a generation of shortfall.
The argument against Proposition 1 is the more tired one: that homelessness has gotten worse despite spending, so spending must be the problem. That is the logic of surrender. Multifamily housing in California costs roughly $1 million a unit to build because California has chosen to build well — prevailing-wage labor, fire-safe construction, seismic standards, accessibility — and those standards exist because Californians have repeatedly decided that the way they build matters as much as what they build, and that the contractors who do the building deserve a wage that lets them live in the same state. The choice to stop paying that price is the choice to keep people on the street. The spending built the floor; the crisis was the gap between what the public sector funded and what an unfettered private market chose to produce. Proposition 1 commits the state to closing that gap at the capital scale only bond financing makes possible.
Critics have called the bond programs “the endless housing-subsidy racket.” The reverse is closer to the truth. The endless racket is the decades-long refusal to build, the local zoning that prices out the children of working parents, and the off-the-shelf assumption that California’s housing crisis is somebody else’s problem to solve. Defeat in November would be a choice to keep doing what demonstrably hasn’t worked and to call the doing discipline. Affirming both propositions is the choice to extend what has been demonstrated to work, and to keep building. California has a home to offer. Voters this November have the chance to take it — and they should.
