37

Why Thrive LA supports 37

Proposition 37 authorizes the California Housing Finance Agency to sell up to $25 billion in revenue bonds to fund fixed-rate second mortgage loans for middle-income buyers of newly constructed homes. Eligible borrowers must be California residents, occupy the home, earn no more than 200% of area median income, and put down at least 3%. The loans cover up to 17% of the purchase price on new homes priced below roughly $1 million to $1.5 million, depending on the county. The bonds are repaid by borrowers' monthly mortgage payments, not by the General Fund. Thrive LA supports Proposition 37, but with clear eyes about what it is and what it isn't. California's homeownership crisis is real. The median home price has locked out an entire generation of middle-income families, teachers, nurses, firefighters, and small business owners who earn solid incomes but cannot clear the down payment barrier. This measure targets that gap directly by subsidizing down payments on new construction only, which is the critical distinction. By limiting eligibility to newly built homes, Proposition 37 ties every dollar of demand-side assistance to an increase in housing supply. That link between subsidy and new units is what separates this from a blank check that merely inflates existing home prices. The measure also includes modest but meaningful construction defect litigation reforms through its "qualified builder option," reducing legal risk for participating developers. That reform, narrow as it is, addresses one of the real barriers that has suppressed condo and townhome construction in California for decades. And because the bonds are revenue bonds repaid by borrowers rather than taxpayers, the measure avoids the worst feature of most ballot-box spending: no new taxes, no General Fund exposure. That said, this is still a $25 billion government intervention in the mortgage market, and Thrive LA does not pretend that comes without trade-offs. Government involvement in lending markets has a long history of increasing costs and reducing private-sector competition. The subordinate lien position of these second mortgages may result in interest rates higher than conventional alternatives, meaning some borrowers could pay more in total financing costs than they would through private products. The "qualified builder option" also layers union-adjacent labor standards onto participating developers, raising construction costs. And critically, Proposition 37 does nothing to address the root causes of California's housing shortage: excessive permitting timelines, exclusionary zoning, CEQA abuse, and the regulatory gauntlet that makes it take years and millions of dollars to build anything. Demand-side subsidies without supply-side deregulation are a band-aid, not a cure. On balance, however, the new-construction requirement, the absence of taxpayer liability, and the litigation reform provisions make this measure a net positive for housing production and middle-class families. Proposition 37 is a reasonable, narrowly targeted tool to help working Californians buy homes. Vote yes.