Background
Housing Is Expensive in California. Housing in California has long been more expensive than most of the rest of the country. While many factors have a role in driving California's high housing costs, the most important is the significant shortage of housing, particularly within coastal communities. A shortage of housing means households wishing to live in the state compete for limited housing. This competition increases home prices and rents. Today, an average California home costs 2.5 times the national average. California’s average monthly rent is about 50 percent higher than the rest of the country.
State Housing Programs Fund Some Home Building. In most years, about 100,000 houses and apartments are built in California. Most of these housing units are built entirely with private dollars. Some, however, receive financial help from federal, state, or local governments. In these cases, the state provides local governments, nonprofits, and private developers with grants or low-cost loans to fund a portion of the housing units’ construction costs. Typically, housing built with these funds must be sold or rented to Californians with low incomes. A portion of housing units built with state funds is set aside for homeless Californians. While the state historically has not provided ongoing funding for these housing programs, California receives approximately $2 billion annually from the federal government to support these projects.
Home Loan Program for Veterans. The state’s veteran home loan program provides home loans to eligible veterans, including veterans who may not otherwise qualify for a home loan. Under the program, the state sells general obligation bonds to investors and uses the funds to provide loans to eligible veterans to purchase homes. Participating veterans repay the state for these home loans. These funds are then used to repay the bonds.
Proposition 1 Proposal
New General Obligation Bonds for Housing. This measure allows the state to sell $4 billion in new general obligation bonds to fund the following housing programs:
- Affordable multifamily housing projects: $1.8 billion
- Veteran home loans: $1 billion
- Infrastructure programs: $450 million
- Homeownership programs: $450 million
- Farmworker housing program: $300 million
Source: LAO Analysis of Proposition 1
