California’s far-left, out-of-touch lawmakers have actually found a day to make the state’s housing crisis even worse with a new idea called the “California Dream Fund.” The fund is intended to subsidize the cost of housing for those who can’t afford to buy a new home, but its real-world impact would likely devastate the very people the state professes to want to help.
The “California Dream for All” proposal would finance up to 45% of a home purchase for qualifying homeowners, ostensibly making it possible for individuals who could not afford to buy a home to do so. The state would thus own a 45 percent share in the homes purchased, and these shares would then be sold to private investors who may be willing to buy them to earn tax-free returns on the appreciating value of the homes they own a stake in.
At the same time, the law makes it clear that the homeowner with a 55 percent stake in the home would be solely responsible for home improvement and repair expenses, insurance costs, and property taxes. It looks great on paper, especially considering that homeownership allows buyers to build equity, thus accruing wealth that can be passed onto future generations. However, a closer look reveals the law’s crippling flaws.
When big government gets involved, prices inevitably go up. The value of homes is sure to rise as sellers realize they can easily earn more for their properties. This would not only affect poor homebuyers who qualify for state aid, but also middle-class individuals who don’t qualify for a subsidy. The timing could hardly be worse. Real estate in rural areas is already rising in value, and home building supplies are in short supply and/or extremely expensive. The worker shortage is also raising prices as home building companies struggle to find workers to actually build new homes. The last thing needed is government-induced inflation.
Government interference has already caused enough problems for California’s housing market. Restrictive zoning makes it impossible to build affordable homes. Lengthy permitting times make it impossible for anyone to build a home fairly quickly. Finally, draconian environmental laws ensure that bureaucrats can block the construction of new homes using flimsy pretexts.
The solution to the problem is for the government to get out of the way and allow the free market to meet rising demand. As we all know, progressives are far too concerned with pushing their own woke programs into law than actually helping working Americans.
