With less than a third of California families able to purchase a home, the lack of affordable housing threatens to derail the state's booming economy. Moreover, it could unravel the state's diverse social fabric, relegating California to a society of housing haves and have-nots.

To meet the challenge of providing new solutions to the state's affordability crisis, the California Association of Realtors has unveiled its 2001 legislative agenda, which is designed to help renters and first-time homebuyers and to increase the supply of housing throughout the state.

"We're at a historic crossroads," said C.A.R. President Gary Thomas. "As we did a decade ago, California REALTORS* are tackling the housing affordability issue. But our legislative package is just the first step of what must be a concerted effort on multiple fronts to begin solving a very complex problem."

C.A.R.'s legislative package includes three pieces of legislation designed to address several components of the housing affordability issue. The three bills are:

Mortgage Loan Insurance Bill: This bill separates the California Housing Loan Insurance Fund (CaHLIF) from the California Housing Finance Agency (CHFA), permitting CaHLIF to operate as an independent mortgage insurer and allowing it to compete more effectively with private mortgage insurers to the benefit of the homebuying consumer in California. This bill primarily will benefit first-time homebuyers who do not have the requisite 20 percent downpayment.

Housing Reform and Incentives Bill: This bill will make it more difficult for a local government to deny housing development projects for low-, very low-, and moderate-income households, and sends local governments the message that once they establish rules for growth they cannot change those rules haphazardly without suffering consequences. Under this legislation, if a court finds that a local government has inappropriately disapproved a project, the court can order the local government to approve the development under the rules already established by the local government; award attorneys' fees to developers who have not had the right or ability to recover them in the past; and award damages if the local government's housing element is not in substantial compliance with the law.

Security Deposit Guarantee Bill: This bill sets up a voluntary program for landlords and tenants to assist tenants who do not have the requisite security deposit to move into rental housing. Under the bill, local governments may apply for an allocation and create a fund to serve as a guarantee that is available to landlords. If a tenant in the program defaults and there is not sufficient security deposit paid to cover the cost of arrears, damages, or other legitimate charges, the landlord may recover that security deposit from the fund.

"The inability of California families to purchase homes of their own could be the Achilles' heel of California's economic development," said Thomas. "Even if the economy continues to forge ahead with productivity gains and low inflation, California is vulnerable to other areas of the country where housing is more affordable."

Compared to other metropolitan areas across the nation, both the San Francisco Bay Area and Southern California are ranked near the bottom in terms of homeownership levels. Only 34 percent of the families in Los Angeles can afford to buy a median-priced home, and in San Francisco it drops to 10 percent, according to data generated by C.A.R. economists.

"Homebuying opportunities are being remapped in an unequal way, locking lower-income and middle-class families out of homeownership," said L.J. Jennings, chairman of C.A.R.'s Housing Affordability Committee.

Published: January 12, 2001

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