Bringing back the dream for California’s first-time buyers
The state’s "Dream for All" down payment assistance program has received more funding after quickly running out of money earlier this year.
Key points:
- The Dream for All program is aimed at first-time buyers and funds up to a 20% down payment with an interest-free loan.
- The state has not yet announced when the program will restart and is working to update its guidelines based on current market conditions.
- The typical California buyer faces huge affordability challenges, with median home prices in the state exceeding $800,000.
California's Dream for All down payment assistance program is getting a new infusion of cash after being quickly depleted earlier this year.
The program, aimed at first-time homebuyers, provides borrowers with an interest-free loan that covers their down payment. The loan doesn't have to be repaid until the house is sold, at which point the borrower would be responsible for paying back the loan plus a share of the appreciation. The program, which launched in late March, was wildly popular — the allotted funding of around $300 million ran out in just 11 days, and the program was paused on April 6.
After some last-minute maneuvering in the state budget, another $200 million was set aside for Dream for All, but it's not yet known when prospective buyers will be able to apply for the funds, said Chris Saur, information officer at the California Housing Finance Agency.
"We are working with our partners in state government, as well as with our stakeholders, to explore ways the program guidelines and delivery system may be updated to respond to current market conditions, and we can't make date predictions before we finalize any possible guideline or delivery system updates," Saur said.
He added that the agency's main down payment assistance program, MyHome, which provides up to 3.5% of the purchase price as a silent second mortgage, is currently open.
The California Dream for All program came about as the state grappled with massive, ongoing affordability issues. At the end of 2022, only 17% of California households could afford a median-priced home of $790,020, according to a recent report from the California Association of Realtors (CAR). That's down from 25% at the end of 2021.
Affordability briefly improved in early 2023, but the median home price was on the rise again in the spring, surpassing $836,000 in May, according to CAR data.
Like much of the U.S., inventory is tight in the Golden State as homeowners are reluctant to sell and give up their low interest rates.
"Consequently, we expect prices to continue to rise on a month-to-month basis for the next few months because of the shortage of homes for sale," said CAR Chief Economist Jordan Levine.
"Even with reduced homebuyer demand, California still has more homebuyers than homes to put them in," added Levine.