Sounds like throwing gasoline into the fire. Housing prices are high because of supply and demand... so CA wants to use taxpayer money to increase demand?
> "I thought the program was genius," said Scott Evans, executive vice president of Cross Country Mortgage, describing what he thought when he first heard about the new loan program.
Mortgage dude likes having more clients. Shocking.
> “When you sell the property or refinance the loan, they take up to 20% of the appreciation. The homeowner gets to keep 80%," he said.
Wow. This gets even weirder. At least I guess this means they'll likely make money on the whole thing, but I'm not sure I love a state government being an outright investor in private homes.
Help To Buy Equity Loan did this with new houses (the buyer technically had to provide 5%, but that was often given by the developer) 10 years ago, it's only just finished. The government part was 40% in London due to the insane prices there.
https://en.wikipedia.org/wiki/Help_to_Buy
The idea behind it is quite reasonable. People couldn't afford to save up for a deposit because all their money went in rent, which was higher than the cost of an equivalent mortgage + home maintenance.
Certainly helped me break out of the earn->rent cycle.
Wouldn’t CA also make money by allowing more housing to be built instead of playing finance shell games ?
The problem needs to be solved on the supply side not demand side.
Reminds me of Heinlein's Friday, in which the heroine visits a future California. The government, having found that those with college degrees earn more money, promptly issues every citizen a bachelor's degree to correct this inequitable situation.
A fair portion of this is that things are so out-of-whack that no one has any plan but to keep the bubble going.