Can California Make Homes Affordable Again?
The Housing Affordability Crisis
Nearly nine in ten adults in the United States reported feeling financial stress at the beginning of the year.[1] That is a staggering increase from the just 17% of Americans who reported the same back in 2001.[2] So, what is contributing to this spike? Well, to no one’s surprise, housing costs are one of the largest drivers of financial anxiety.
Around 50% of renters are cost-burdened, meaning they spend over 30% of their income on rent.[3] Nearly 70% of younger generations – Millennials and Gen Z – report feeling locked out of buying a home because of high mortgage rates, forcing many of them into an already inflated rental market.[4] Recent homebuyers are paying record-level mortgages, and over 65% of low-income families spend more than half of their paychecks on rent alone.[5]
What’s even more concerning for us here in California is that we lead the nation in housing-induced financial strain, with 20% of all households spending more than half of their income on housing alone.[6] We have the highest median rent in the country at $2,895 a month,[7] and a median home price hovering around $904,640.[8] Only 44% of households can even qualify for a mortgage on a bottom-tier starter home,[9] while 76% of existing homeowners have legacy mortgage rates locked in below 5%, creating what has been called a “golden handcuff” effect.[10]
So, housing affordability is a very real problem. If you, as a Californian, feel stressed about paying your mortgage or rent; if you wonder when, or if, you will ever be able to buy a home in our state; if you need help with a down payment; if you spend over 50% of your income on housing costs; or if you live in a place that is simply too small for the size of your family – I want you to hear me when I say: all of that is real. Your struggles are not fake, your fears are not invalid, and you are right to want help.
So, the question becomes: how do we make things better? This election, we have two propositions on our ballot that are being proposed as solutions to this crisis. Propositions 1 and 37 both claim to address high housing costs and promise real solutions. But, as always, we have to dive deeper into the details to understand: are these root-cause fixes, or are they band aids that won’t truly stop the bleeding? That is what we are exploring today!
Three Criteria for Examining Propositions 1 & 37
As we look at these two propositions today, I want to approach them with one question in mind: Will this actually make housing more affordable for Californians? Not, does it sound compassionate; not does it help someone in the short term. Those things matter, but what is more important is to ask: does this actually move us toward a California where working people can afford to rent or own a home?
I want to establish three criteria for how we will evaluate each proposition toward this end goal.
1. First, does it address the root problem of high housing costs? Is it increasing housing supply, reducing the cost of housing, or addressing something else?
2. Second, who actually pays? Is the cost of the proposition shifted onto taxpayers and homebuyers? Are developers incurring higher costs? Is the state General Fund paying for a new program?
3. And third, what happens five to ten years from now? Does this create a more affordable housing market, or do we just create another government program that people increasingly depend on?
These criteria will help us discern whether or not what is being proposed is a true solution that we should support, or if it is a band-aid that perpetuates the cycle of programs and policies that sound much better than they are in practice.
Proposition 1 – Details & Evaluation
So, with that being said, let’s start with breaking down the details of Proposition 1.
Proposition 1 would allow California to borrow $11.25 billion to fund housing programs. It would be split into two main groups: $10 billion would go toward affordable housing programs and would ultimately be paid for by taxpayers, while the remaining $1.25 billion would go toward home loans for veterans, who would repay those loans to the state.
The $10 billion housing portion would add an estimated $500–$600 million in annual costs to the General Fund for about 25 years. And because this is a bond, California would also pay interest on the money it borrows, bringing the total cost to about 15% higher than the face value of the bond. The veteran home loan portion, on the other hand, would operate at no direct cost to the state, as veterans would make their payments directly to the state, allowing the state to repay those bonds.[11]
The question being posed to you as a voter is: Do you want California to take on $11.25 billion in bond debt to expand government-funded affordable housing programs and provide home loans to veterans? And the policy debate underlying this proposition is whether borrowing $10 billion, and committing the General Fund to decades of repayments, is the best way for California to address its housing problems.
Our first criterion for examining Proposition 1 is to ask what it is doing to address the root cause of high housing costs in California. What Proposition 1 does is help build more housing supply that is then required by law to be “affordable housing,” meaning it is rented or sold at certain capped prices, generally for people who meet specific income requirements.
To be fair, this does address one piece of California’s housing problem: we need more housing. If we don't have enough homes and apartments available, prices are going to remain high, due to the laws of supply and demand. So, building more housing is a good thing. But I think we have to think deeper than this to ask why housing is so expensive to begin with.
Proposition 1 doesn't really address the underlying cost of producing housing in California. It doesn't fundamentally change how long it takes to get a project approved, how much developers pay in fees, how much it costs to comply with California's regulations and building requirements, or how difficult it can be to build housing in many parts of the state. Instead, the government is essentially stepping in with taxpayer-funded financing to make some housing projects financially possible and then requiring those units to be offered at below-market rates. That can help the specific people who receive those units, but that's significantly different from making housing itself more affordable, so that low-income families don’t need as much subsidization to begin with.
There's an important distinction between subsidizing the cost of housing and reducing the cost of housing. Proposition 1 is only doing the former. But subsidization has a cost – a literal cost to taxpayers, since the only way to pay for it is through the General Fund, funded by our taxes, and a long-term cost to the housing environment. Adding more housing means nothing if landlords cannot charge market-rate rents. The ultimate goal should be to make housing more affordable without requiring government to permanently subsidize the difference. We should want a housing market where ordinary Californians can afford to rent or buy because housing is actually cheaper, not simply because the government is covering part of the cost.
So, I would say this is not a root-cause solution. If California continues to make housing expensive and difficult to build, we can continue borrowing billions of dollars to subsidize the housing that does get built, but we're still left with the underlying problem.
Then our second criterion is to ask who really pays for this. There are two parts to this answer. The $1.25 billion veterans' home loan program is designed to pay for itself. The state sells the bonds, uses that money to provide loans to veterans, and then the veterans' payments are used to repay the bonds. So, according to the LAO, there is no direct cost to the state for that portion.
But the other $10 billion is different. That money would ultimately be paid back through California's General Fund, which as I just mentioned means taxpayers are on the hook. The state estimates that this will cost the General Fund approximately $500–$600 million every year for about 25 years. And because we're borrowing the money rather than paying for it upfront, we're also paying interest. The LAO estimates that the total cost will be about 15% higher than the face value of the bond.
So, when you hear “$10 billion for affordable housing,” I think it's important to remember that California isn't simply spending $10 billion and moving on. We're committing future state budgets, and therefore future tax revenue, to paying that money back for decades! We have continually had budget deficits, we need to cut down spending in our state – so why should we take on more debt if it is for programs that won’t actually make things better in the long-term?
It isn’t always wrong to commit tax dollars to a goal. But the purpose of our taxes is to fund essential services, meaning things that are truly needed. The question is whether this is the best use of those tax dollars. If we're using billions of taxpayer dollars to subsidize housing without addressing the reasons housing is so expensive in the first place, then we're not creating a sustainable solution, we're creating a band-aid. And band-aids cost money!
That's what concerns me about continuing to expand government spending on programs that don't address the underlying problem. We aren't just spending money today; we're committing future tax dollars to maintaining a system that will 100% leave you facing the exact same housing crisis years from now. We will be back here in another decade asking taxpayers for another $10 billion because the problem never went away.
Lastly, as I just alluded to, we have to ask how this will impact California in the long term. Short-term fixes feel really good today, and that's understandable! If you directly benefit from a policy, it's easy to look at the immediate result and say, “This is helping me, so this must be a good solution.”
But we must look beyond the immediate benefit and ask what kind of environment we're creating over the next 10, 20, or 25 years. If the underlying housing market remains unaffordable, continually spending taxpayer dollars to subsidize housing doesn't actually solve the problem. It will lock us into a cycle where government has to keep stepping in to make up the difference between what housing costs and what people can afford.
And remember, when government subsidizes housing and places affordability restrictions on those units, those units are no longer operating entirely according to normal market incentives. Meaning that landlords have less incentive to be landlords, or developers have less incentive to develop, because they know they cannot charge market rates to earn a profit. That is a genuine problem that cannot be ignored just because it’s the boring nuts and bolts of supply and demand.
Ultimately, I don't think our goal should be to create a California where people need a government subsidy in order to afford California housing. Our goal should be to create a California where housing is affordable enough that people don't need the subsidy in the first place. Which means that, in my view, Proposition 1 falls short.
What About Veterans?
Before we move on to Proposition 37, I have to address a question you may get – or I may get – because of this view. Proposition 1 is mostly about affordable housing. In fact, about 88% of the bond funds would go toward housing programs that are ultimately paid for by taxpayers. But there is also a portion that directly benefits veterans through home loans.
So, if I'm telling you to vote NO on Proposition 1, you might reasonably ask (or you might be asked), “Are you against helping veterans?” The answer is no, absolutely not!
I think this is one of the frustrating things about how propositions like this are put together. Proposition 1 takes multiple programs with completely different purposes and completely different funding mechanisms and puts them into one single question for voters. The veterans' portion is designed to operate differently from the affordable housing portion. Veterans repay their loans, and those payments are used to repay the bonds. The $10 billion housing portion, on the other hand, is ultimately repaid through the General Fund and therefore by taxpayers.
Those are two very different policies! If California wants to create or expand a program to help veterans purchase homes, I think that's a conversation worth having on its own merits. You can support helping veterans while simultaneously believing that California should not take on $10 billion in taxpayer-backed debt for other housing programs. But when these things are bundled together, you don't get to vote on them separately. You get one vote: yes or no to the entire $11.25 billion package.
I think this is an important distinction for us as voters to understand. Voting no on the entire proposition does not mean you oppose every individual program contained within it. It means that, when forced to evaluate the proposition as a whole, you don't believe the entire package is a good use of taxpayer dollars.
We as voters have to recognize when a ballot measure contains things that we support and things we oppose, we have to be wary of allowing one sympathetic component (like helping veterans) to become a reason to approve an entire package of policies we wouldn’t otherwise wouldn't support. If these are genuinely good programs, they should be able to stand on their own merits, and I think voters deserve the opportunity to vote on them that way.
Proposition 37 – Details & Evaluation
Proposition 37 would create a new state program to help middle-income Californians buy their first home by helping them cover a large portion of their down payment. The state could issue up to $25 billion in revenue bonds to fund the program. Here's how it would work: homebuyers would be required to put down at least 3% of the home's purchase price, and California could provide a loan for up to another 17%.[12]
By issuing revenue bonds, the homeowners who receive the assistance would make payments on their state loan. Those payments would then be used to repay the bond investors and cover the administrative costs of the program. So, for the homeowner, this means you would essentially have two loans to repay – your traditional mortgage and the additional homeownership loan from the state.
Let’s go through an example to make this more tangible. If you were purchasing a $600,000 home, you would need to provide at least 3% of the house price, which is $18,000, yourself. The state could then provide up to $102,000 toward the down payment, with the remaining $480,000 financed through a traditional mortgage.
There are a few stipulations for who would be eligible to receive this type of down payment assistance. According to the Legislative Analyst’s Office, a buyer would have to meet the following requirements:
Be a California resident,
Have a household income no more than twice the typical income for your area (roughly, no more than 200% of the area's median income),
Be purchasing a qualified new home – it is outlined that the buyer would generally need to be the first purchaser of that home, and
The home would have to fall under specified price limits.[13]
So, an important clarification is that this isn't a program where any Californian who wants a house can get 17% from the state. It's targeted at middle-income buyers purchasing qualifying new homes.
Now, I can see why this would sound incredibly appealing to a first-time homebuyer – especially as someone who hopes to buy a home in our state someday! Coming up with a six-figure down payment is a huge barrier, even for people who have good jobs and could otherwise afford a monthly mortgage payment. But that brings us to the policy question we really need to ask: Does helping people afford a down payment actually make housing more affordable, or does it simply give buyers more purchasing power in a housing market where there aren't affordable homes?
Let’s go through our three criteria! First up, does this address the root cause of the housing crisis in our state?
Remember, the fundamental problem we identified is that California does not have enough housing to meet the demand for it. When too many people are competing for too few homes, prices go up. The Legislative Analyst’s Office has identified this shortage of housing as the most important factor driving California’s high housing costs.
So, does Proposition 37 actually add housing? In a way, potentially yes. This program is specifically designed around qualified new homes. Developers can build homes that are eligible for the program, and the buyers receiving the assistance have to purchase qualifying homes. So, unlike a program that simply gives people money to spend on existing homes, Proposition 37 at least has a direct connection to new housing construction.
If a developer knows there is a pool of qualified buyers who have access to this additional financing, that could make it easier to sell new homes, which could create an incentive for developers to build more of them. If the program then actually results in more homes being constructed, then we are at least moving in the direction of addressing the supply problem.
But – and this is a big but – the LAO itself says we don't know yet how significant that effect would be. Whether Proposition 37 actually results in more home construction is one of the major unknowns surrounding the measure. That's because the proposition is fundamentally a demand-side policy. It gives qualified buyers more purchasing power by making it easier for them to come up with the money needed to purchase a home. The question is whether that additional purchasing power will actually translate into more homes being built, or whether it will primarily translate into more people competing for the homes that are already being built.
That distinction is incredibly important! If California has 100 people who want to buy a home and only 50 homes available, giving more of those 100 people access to financing doesn't automatically solve the shortage – you still have 100 people competing for 50 homes.
So, the best-case scenario for Proposition 37 is that the additional demand created by the program encourages developers to build more qualifying homes. Then we're increasing both the number of buyers and the number of homes available to them. But if developers don't respond by building significantly more homes, we could simply be putting more purchasing power into an already constrained market.
Proposition 37 is closer to addressing the root problem than simply subsidizing existing housing, because it is tied to new construction, but it still doesn't directly address many of the reasons California struggles to build enough housing in the first place – things like the cost of construction, land costs, government fees, regulations, and the time and difficulty involved in getting projects built. What I would rather see is policy that makes it easier and less expensive for the private market to actually produce more housing in the first place. I don't want Californians to need a 17% government-backed loan to afford a house.
Our second criterion is to ask who pays for Proposition 37. The bonds approved under this proposition would not be repaid through California's General Fund. Instead, the homeowners who receive the assistance would make payments on their state homeownership loans, and those payments would be used to repay the bond investors and cover the administrative costs of the program. So, unlike Proposition 1, taxpayers aren't directly responsible for repaying these bonds. The people who participate in the program are.
But – and listen here because this is important – that doesn't mean Proposition 37 is free! If you participate in this program, you're taking on an additional loan. You still have your traditional mortgage, and then you have this additional state homeownership loan that you are responsible for repaying. Is this additional debt a good tradeoff for the homeowner, and is the program financially sustainable?
Debt is still debt. If we're making it easier for people to borrow money to buy expensive homes, are we actually making housing more affordable – or are we actually making an expensive housing market easier to finance? Just because you’ve found a way to stretch the payments out over a longer period of time doesn’t mean you can actually afford the house. It simply means you’ve found a financing structure that allows you to buy something that is still outrageously expensive.
Which brings us to our last criterion – what long-term impact will this have on the housing crisis in our state?
This is where there is a very important point to make, and it applies to both of the propositions we are talking about today. Assistance is not affordability.
If the government gives you money toward your rent, that may make your rent more manageable, but it doesn't mean your rent is affordable. If the government gives you money toward your down payment, that may make it possible for you to buy a house, but it doesn't mean the house is affordable.
You have more assistance, but the affordability has not changed. This is ultimately what concerns me about Proposition 37 in the long term. If we have a housing market where homes are fundamentally too expensive, and our response is to give qualified buyers more purchasing power, we are once again treating the symptom rather than the underlying problem. Even if it does encourage more construction, we're still not addressing the reasons it is so difficult and expensive to build housing in California in the first place.
How to Vote in November
We need to be thinking bigger. We shouldn't build a permanent system where Californians need government assistance to afford California housing. We should build a housing market where Californians can afford housing because we're actually building enough of it, and we’ve removed the restrictive and burdensome regulations that got us to this point in the first place. THAT is the long-term solution I'm interested in.
If we solve affordability by continually increasing subsidies, we aren't really solving affordability. We're creating a system that requires more and more assistance just to keep people afloat. Assistance can help someone survive an unaffordable housing market, but it cannot, by itself, make that housing market affordable.
At the end of the day, Californians deserve more than policies that simply make an impossible situation slightly more manageable. We should be ambitious enough to pursue solutions that give families a genuine path toward stability, ownership, and independence! These propositions may offer temporary help to some groups of people, but we should not confuse helping people navigate a broken system with building a system that actually works. We can, and should, do better. Which means, come November, we must vote NO on Propositions 1 and 37.
References:
[1] American Bankers Association. “Survey: Most Americans Report Stress Over Finances.” ABA Banking Journal, February 5, 2026. https://bankingjournal.aba.com/2026/02/survey-most-americans-report-stress-over-finances/.
[2] Saad, Lydia. “One-Third of Americans Worry About Paying ‘Normal Monthly Bills.’” Gallup.Com, May 9, 2001. https://news.gallup.com/poll/1735/onethird-americans-worry-about-paying-normal-monthly-bills.aspx.
[3] Cunningham, Mary. “Americans’ Paychecks Are Getting Swallowed by Rent. See How Much People Pay in Major U.S. Cities.” CBS News, August 14, 2026. https://www.cbsnews.com/news/us-rental-market-housing-shortage/#:~:text=The%20real%20estate%20firm,housing%20expenses.
[4] Rose, Jeff. “49% of U.S. residents say they are struggling to pay rent or their mortgage.” Facebook, February 27, 2026. https://www.facebook.com/photo/?fbid=1713417483317297&set=a.782814696377585.
[5] Alfonseca, Kiara. “‘I Eat or I Pay My Bills’: Americans Describe Rent Burden Fears, Concerns.” ABC News, March 1, 2024. https://abcnews.com/US/eat-pay-bills-americans-describe-rent-burden-housing/story?id=107566391#:~:text=Of%20the%2022.4%20million,income%20toward%20rent.
[6] Vanguard News Group. “Census Data Shows California Leads Nation in Housing Cost Burdens - Davis Vanguard.” The People’s Vanguard of Davis (blog), September 26, 2025. https://davisvanguard.org/2025/09/california-housing-cost-burden/#:~:text=California%20had%202.8%20million%20households,households%20in%20the%20state%2C.
[7] Walters, Dan. “California Tool to Encourage Low-income Rentals May Suppress New Apartment Construction.” CalMatters, August 13, 2026. https://calmatters.org/commentary/2026/08/inclusionary-zoning-housing-suppress-construction/#:~:text=Recently%2C%20the%20U.S.,%24150%2C000%20average%20in%20Texas.
[8] Gereboff, Noah. “California Housing Market 2026: Outlook for Landlords, Property Managers and HOA Boards,” August 14, 2026. https://managecasa.com/articles/california-housing-market-2026#:~:text=Median%20home%20price%20%7C,6.65%E2%80%936.75%25.
[9] Legislative Analyst’s Office, “California Housing Affordability Tracker (2nd Quarter 2026) [EconTax Blog],” January 24, 2024, https://lao.ca.gov/LAOEconTax/Article/Detail/793#:~:text=about%2044%25%20of%20California,about%2057%25%20in%202019.
[10] Ibid.
[11] Legislative Analyst’s Office, “Proposition 1 [Ballot],” November 3, 2026, https://lao.ca.gov/BallotAnalysis/Proposition?number=1&year=2026.
[12] Legislative Analyst’s Office, “Proposition 37 [Ballot],” November 3, 2026, https://lao.ca.gov/BallotAnalysis/Proposition?number=37&year=2026.
[13] Ibid.
