The Washington Post

California wants to help me buy a house. Here’s why that’s a bad idea.

- BY THOMAS IRWIN The writer works for a nonprofit in Los Angeles focused on economic developmen­t and is a member of the Southern California Associatio­n of Government’s Housing Leadership Academy.

At this point, few people would dispute the idea that California has a severe housing crisis. With more buyers than available supply, the median home price is $898,000. Rent for a three-bedroom house is more than $3,000 a month. Many families like mine — hoping to stop renting and buy our first home — are feeling desperate.

It was tempting to celebrate news late last month that the state legislatur­e had passed a budget that included half a billion dollars for a program providing down-payment assistance for first-time home buyers. But the well-intentione­d legislatio­n, as is so often the case with policies throwing money at problems, may end up doing more harm than good.

The “California Dream for All Program” would lend qualified middle-class California­ns up to 17 percent of a home’s value for their down payment. Sounds good. If my family were lucky enough to be one of those funded through the program, it theoretica­lly could provide just enough assistance to help us break into the housing market.

The more likely scenario: With more money in the real estate market but not enough houses, prices will rise. The down-payment help would enable my family to bid on a house, but we’d be in no position to compete with anyone who wants to outbid us. And that’s exactly what happens when there aren’t enough houses available.

The big winners of subsidies will ultimately be existing homeowners, who will naturally seek the best price.

That’s a crushing realizatio­n for my wife and me. We live in East Los Angeles and have spent the past four years saving as much as possible to enter the housing market. We’re both college-educated and work nonprofit jobs that, while not highly lucrative, would have provided enough for a modest home just a decade ago. But it seems no matter how much we save, prices steadily climb beyond our budget.

In March, the California Department of Housing and Community Developmen­t said 2.5 million new homes would need to be built by 2030 to address a housing shortfall that has been half a century in the making.

Over that span, ever-tightening zoning regulation­s have choked off housing options for countless middle-class families. Townhouses, duplexes and small apartment buildings are widely banned — including on 75 percent of residentia­l land in Los Angeles and 94 percent in San Jose.

State lawmakers periodical­ly try to attack the problem at its root, but ambitious bills that would address the supply problem have repeatedly died in Sacramento at the hands of politician­s fearing retributio­n from not-in-my-backyard voters. Hence the politicall­y safer but financiall­y dubious move to subsidize down payments for first-time home buyers.

To assess the prospects of success for the California Dream for All fund, consider the effect of a homeowner subsidy already in effect. Research on the mortgage interest deduction shows that subsidizin­g homeowners’ mortgages pushes up the cost of housing because buyers can afford to pay more for their houses.

The deduction does not make homeowners­hip more accessible; it often prices lower-income buyers out of the market, while better-off homeowners disproport­ionately use the benefit simply to buy larger homes.

If government is going to subsidize anyone’s housing, it should be those most urgently in need. In California right now, 160,000 people are living without a home, and an additional 1.5 million low-income renters spend over half their income on rent. Renters stretched to paying 50 percent of their income on rent are unlikely ever to afford to buy a home, even with homeowners­hip subsidies.

As much as I’d enjoy government assistance in buying a house, I’m under no illusion that my predicamen­t is as dire as that of someone struggling to keep a roof over their head.

Instead of inviting higher housing prices by subsidizin­g first-time home buyers in California, lawmakers could steel themselves against NIMBY (not in my backyard) resistance and reform at least some zoning laws. A California bill now under considerat­ion would remove parking minimums across the state. (Requiring a certain number of parking spots is a common way for localities to block constructi­on of denser housing). In 2019, San Diego dropped its parking requiremen­ts in areas near transit stops and saw housing constructi­on more than quadruple.

Another bill would legalize housing in commercial corridors. Evidence from Minneapoli­s shows that such a move produces more housing and helps bring down prices.

I would love to buy a house, but I would prefer to do it without taking resources that could go to those truly in need. Providing financial assistance to firsttime home buyers does nothing to produce more houses — and building more houses, not just making existing ones more expensive, is the only way California can solve its housing problem.

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