Today’s housing market is in a frenzy mode, with prices rising tremendously in places like California. This rise has made it impossible for first-time buyers to get into homeownership. However, the good news is that price would no longer be able to keep them out from owning their dream home, thanks to the “California Dream Fund.”
The proposed plan will allow potential homeowners to cut down the price of a home by almost half. The program is to subsidize home purchases up to 45%.
Low-Cost Homes Are Up 18% in April
First-time homebuyers commonly purchase low-tier homes because they are less expensive. However, California’s price of low-cost homes has increased by 18% in April 2021 to approximately $630,000, meaning only a few first-time homebuyers can afford to own this type of house. Additionally, as home prices continue to rise above incomes, only renters with significant savings can make purchases, pushing low-income earners to the side.
But, in a budget plan debated in the California Assembly, lawmakers have agreed to create a plan to mitigate the rising home price and help first-time buyers cut down their first purchase up to 45%. The plan will have a” silent partner” who will cover the other half of the total costs of the home.
Apart from cutting down on first home purchases, the proposed “Plan” will address the historical infrastructure gap between the people of color/ minorities and the whites regarding homeownership. Additionally, it will safeguard their wealth, allow them to thrive better, and build their wealth.
Speaking of eligibility, the lawmakers state that homebuyers can only qualify if their income meets specific criteria, while the price of the home will determine home eligibility. However, regions in the U.S. will determine the home price and income limits.
The Proposed Plan Has No Clear Repercursion for Default
The U.S. Senate and Assembly hope to pass the plan in 2022, but questions are being raised on the plan’s practicality. For instance, experts are wondering what would happen to a homeowner who defaults on their payments. Are they going to lose the property or not?
So far, the plan hasn’t clearly defined what will happen when foreclosure sets in or addressed other problems like zoning or low supply that are the reasons for the rising home prices. We hope that the legislature examines the plan further to make necessary adjustments to address the roots of the increasing home prices.
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The Power Is Now Media is an online multimedia company founded in 2009 by Eric L. Frazier, MBA, and is headquartered in Riverside, California. We are advocates for homeownership, wealth building, and financial literacy for low to moderate-income and minority communities. The Power Is Now Media corporate office is located at 3739 6th Street Riverside, CA 92501. Ph: 800-401-8994 Website: www.thepowerisnow.com.
Published by Eric Lawrence Frazier MBA
