As of today CA is now giving taxpayer money to illegals to buy houses with zero down and a 0% mortgage

Nonsense @dancingtongue

@dancingtongue Such a heavy government footprint is practically a guarantee of failure. Much of the middle class economic stability is based on home value appreciation and limited debt, and your proposal takes the poor in an opposite direction. It typically takes a homebuyer 5+ years to have sufficient equity plus appreciation to sell and walk away clean. The working poor don’t often have a 5 year future projection of income stability. Left-wing nut Barney Frank almost brought the whole economy down when he and his communist collaborators tried to merge the US Treasury with mortgage backed securities. Economic stability for homebuyers has to come first. Otherwise that house and mortgage can become a dead weight of misery for both the homeowner and the taxpayers who “helped” put the buyers over their heads. Look around America at all the homeless encampments, where did they come from? They came from homes made too easy to purchase by government programs for homebuyers without sufficient income projection to either pay for the house or unload it under favorable terms.

Your home ownership schemes try to start at the wrong end of the economic process, you are trying to get to the finish line by ignoring the starting line. To bring prosperity to the working poor a better place to start is by stopping giving employers reasons to move out of town, beyond the reach of over-controlling, over-taxing government. By stopping vilifying employers or people with money. Trickle-down economics isn’t as bad as the piss-on economics of Democrats. Keep pissing on investors and businesses and you will convince them to not only leave town but to also leave America. Undermine the economic engines that pay the wages that are used by workers to make their mortgage payments and you are effectively pissing on the people and making them homeless.

@Heartlander First of all, It is not "my proposal". He asked if a Californian could explain it. I simply put forward the rationale behind the legislation being proposed without taking a position on it.

While I agree with a good portion of what you say, I don't know how well-versed you are with the situation on the ground in California. The Musks and Ellisons may be fleeing to tax havens for themselves, but they are leaving the factories, offices, and workforces behind. The low occupancy rates in inner city office buildings is more from office workers having gotten used to working remotely during the pandemic and not wanting to return to the offices than the jobs moving out of state.

I agree the way mortgages were being given away like after dinner mints that led to the foreclosure bust in the housing market was bad policy, bad legislation. We can argue all day whether that was too much progressive socialism or a sell out in to the financial industry and their giving big commissions to former used car salesman for getting anyone to sign a mortgage product. As I stated in the explanation, one of the intended safeguards in the current program is you have to have a qualified mortgaged in hand before the state provides the 20% help on the downpayment. And to be clear about the housing market in California, in the populous areas of the State the average home price is around $1 million, so the likelihood is slim of a common worker being able to save up the full down payment for a first time house -- and we are only talking about first homes, not every idiot constantly trying to upgrade and buy the next McMansion that came on the market as with the previous mortgage crisis.

Also, your American dream of home ownership being the way a middle class is formed is just that these days: a dream, imho. One of the reasons the housing market in California is so out of reach is the number of big time real estate investors bidding up the prices to either rent them out at exorbitant rates or flip them at a good profit. Hardly a day goes by without my getting 2 or 3 offers for my property from these people by phone, in the mail, by email.

Speaking of which, I was fortunate enough to not need a down payment for my first home. That big, bad government you so dislike assured that I could get a mortgage with nothing down as a Veteran. I could barely cover the mortgage payment, let alone come up with the down payment. I paid $23,500. Sold it for $800,000. Bought my current for $320,000. It is now worth $1.5 million or more. And because of the ridiculous, imho, Prop 13 tax loophole written for the big real estate developments and apartment complex owners, the valuation for property tax purposes is now around early 90s for me while the neighbor across the street who bought around 2015 is now up to about 2020 prices and whoever buys the house from the estate of my former neighbor across the street most likely will be paying current market prices. And you can't blame progressives for that cockamamie legislation.

@dancingtongue

Thanks, and I'm sorry for implying or saying that it was your proposal :)

I understand about remote workers and how things have changed since the pandemic. A dozen years ago our daughter worked remotely 2 states away for two years and over those years went to her physical office a total of 3 times; and it actually went great for both her and her employer in that she almost became a satellite location for business there. Post pandemic, now, one of our own staff will be working for a few weeks from London. In our business, remote work was unheard of pre pandemic. Now, almost 50% is done remote. And much like with Elon and Ellison, I imagine that many traditional office workers will question the need to live where they live if they work remotely.

We in the heartlands follow the same trendline as California, but at a 25 or 30% scale, so a $50K house purchased 40 years ago is (only) priced at $500K today. But as I remember, when the housing market crashed a dozen+ year ago, the crash temporarily wiped out 10+ years of appreciation, so owning your own home isn't quite like cash in hand.

The California plan sounds more like a loan than a gift, which then, I assume, would let it escape federal income tax implications.

So, if a first time buyer pays cash, 100% down, on a $million home, would the state then lend him/her $200K to help with that purchase?

This is starting to sound like a gift for millionaires :) and starting to sound like the state of California may be trying to give non-rich people a reason to move elsewhere?

And/Or a gift to the US Treasury when considering the capital gains tax when older homeowners sell and move into a rented independent living arrangement.

The zero-down mortgages that both you and I enjoyed came with slightly higher interest rates that offset the lenders' risk. And for the VA loans, came as catchup aid for a GI's late start on civilian life after a stint in military service.

I think the need for affordable houses close to where people work has come to be called "workforce housing" that many (most?) states are trying to address and not to be confused with homelessness, which is yet a different issue. But until the next housing market crash, the solution has come in the form of renting rather than ownership, and the blooming of rental communities that seems to address lifestyles rather than just being a place to hole up for a few years before buying. An apartment building is a business, and the landlord gets to deduct taxes and interest; homeowners usually don't, but get the benefit of a substantial standard deduction regardless of whether they own or rent. So until the next housing market crash, the calculations favor renting for those who aren't already in their own homes. My casual awareness suggests that most states and cities are providing tax relief for new workforce rentals rather than tampering with home purchases.

@Heartlander
Another dog whistle reaction, imho. First, most millionaires are not first-time buyers and this is limited to first time home buyers. Second, I believe you have to be under some income level to qualify so if you have enough to pay 80% of the market price you aren't going to qualify for the state's 20% of the down payment.


This is an issue, but I don't see any particular connection to the issue we started out discussing. My mother did not qualify for Medicare. In order to qualify for Medicaid when she went into a nursing care home, she had to spend down all of her assets. So she sold her house and the rental unit she had for income since she only had a paltry teacher's pension. Between capital gains and the $5K the nursing home was costing, the money was quickly gone. And the interviewers to qualify for Medicaid had the audacity to ask "where did the money go?"


True. And even then it was hard to find either lenders or real estate agents who would deal with veteran loans -- Cal-Vet, in my case. We were successful only because the house had been tied up in probate court for a couple of years, had had minimal maintenance for years that the sellers only had done a slap dash paint job and carpeting to try and make it look better, and it was in an urban inner city area still suffering from "white flight" to the suburbs. The realtor was desperate to get it off her listings and had leverage with her go-to lender.

But in those days the banks were still heavily regulated. In all of your arguments I see no mention of the fact that what partially led to the mortgage bubble burst, and the dot com bust before it, was the significant deregulation of banks. The regulations were there to protect the financial institutions from destroying themselves by over-extending credit to anyone and everyone. Has there been an instance where the frenzy to deregulate an industry hasn't led to terrible setbacks for the industry as well as consumers?


It is referred to "affordable housing" here, and most communities are setting requirements on developers that a certain percentage (usually in the 20-25% range) of any housing project must be for affordable housing, pegged to a certain socio-economic income level. And the State is requiring communities to do that, as well as relax their single family, stand alone zoning ordinances that has stood in the way of higher density housing in more urban areas.


Higher density housing complexes in urban areas, with amenities, tied where possible to public transit, and reduced dependence on automobiles with bike lanes, easy access to rental bikes and scooters. And in addition to new high rise, high density complexes, relaxation of zoning laws to permit building of ADU (additional Dwelling Units, aka in-law apartments) on the big lots of single family homes from the 50's and 60's when the population was roughly half of today's California population in urban areas.


Add to that the incentive of our Prop 13 property tax "relief" program that is heavily skewed to the benefit of the corporate landlords who wrote the proposition, acquired the required number of signatures to qualify for the ballot, and spent million to get it passed by a gullible electorate. It all is killing the American dream of a middle class buying a home to amass equity and wealth, by subsidizing the corporate development/rental sector over individual home ownership, imho. But any effort to help individuals buy first time homes -- and the legislation that started this thread was aimed at all first time, low income buyers; not just undocumented -- and the cries of Socialism and over-regulation, etc., come cascading down.

Harris says she is going to fix that? Have you heard how she plans to fix that? How do you think Harris will fix that? (Not at all is an acceptable answer). @dancingtongue

@jackjjackson It's mostly state issues, and last time I looked she was running for Federal office. Most of the issues she will be facing require Congressional action where nothing will be done until we elect representatives and Senators from both parties who are willing to find common ground and pragmatic solutions rather than playing gotcha and finger pointing gridlock 34/7. And the bottom line solution to that is reining in the flood of election money from corporations and oligarchs so the 99% of us can be heard, and that requires getting rid of the stupid Citizens United ruling of the Supreme Court, even if it requires a Constitutional Convention.

What does that have to do about Harris being a good presidential candidate? @dancingtongue

@jackjjackson The discussion, which you started, is about proposed State legislation in California. Harris's qualifications as a potential President is a total non-sequitur to that discussion. If you want to start a discussion on Harris's qualifications, go ahead. I may or may not decide to weigh in.

Inasmuch as Harris supports it that makes it highly relevant. Your total disconnect from factual current events past and present makes you nothing more that an uninformed partisan hack. @dancingtongue

@jackjjackson Since Trump's views on solving the housing crisis are quite similar to Harris's I assume you feel the same about his fitness for the office. Fact remains, most of the work to be done is in the States, local communities, and Congress.

Since you’re so smart, what exactly is Harris’s view please? @dancingtongue

@jackjjackson https://www.eastbaytimes.com%2f2024%2f08%2f27%2felection-2024-latest-harris-ad-focuses-on-housing-former-democratic-congresswoman-endorses-trump%2f/RK=2/RS=CufjNyxw5FQP8nzXGUWTwgudn4Q-

I particularly like the line about how it is an area where red and blue states are coming together on solutions because the issue hasn't been polarized, but I guess you are out to change that.

@dancingtongue


But true at any scale. Most first time home buyers also can't afford a $300K California "starter" home, and a $$ kicker loan from the state sounds like a lure to overextend; so not only will they owe the mortgage company but also owe the state. Where there is free money from the government, even in the form of a loan, it's like a magnet attracting people to the free money. Example, if my kid moved to California and wanted to buy a $300K "starter" home, I'd be tempted to give them as big a down payment as I could afford, even $240K, considering that the state of Cal will kick in 20%.


The capital gains issue probably makes older people reluctant to sell their homes, thus affecting the supply side. Add to that the appreciation track; like why sell my house to move into a senior apartment if my house value is increasing 15% a year?


I believe that's a standard Medicaid practice. Nursing home care isn't deductible, nor covered by Medicare or medical insurance, yet Medicaid does cover nursing home care; so there is a look-back period intended to prevent people from giving all their assets to their kids before claiming neediness. I think most financial advisors know the process for spending oneself down to qualify for Medicaid. I'm reluctant to criticize millionaires from spending down to qualify for Medicaid because of the way Medicare or even the IRS pretends that nursing home care isn't a health care cost. For poor people the government picks up the nursing home tab for Medicaid; for everyone else they don't even allow a tax deduction. There's another issue there that's not part of this discussion but yet another example of how government policy has a way if turning middle class Americans into lower class Americans: The Medicaid reimbursement rate in many cases is below the beak even cost for many nursing homes, thus forcing nursing homes to charge more to non-Medicaid residents. It's the old cost-shifting crap that makes almost all of healthcare unaffordable to more and more Americans.


The deregulation failure was related to the S&L crisis not the mortgage/bank crisis that came a little later. If I remember right, SnLs failed when they were allowed to invest in riskier assets without a corresponding increasing in FSLIC premiums and/or equity requirements sufficient to cover the added risks. When enough risky S&Ls investments failed, there wasn't enough equity to cover the shortfall, requiring the FSLIC to bail out the depositors. At some point the FSLIC ran out of money and the government had to step in to the tune of a $trillion. The damage didn't stop there, Bush the senior then had to break his "read my lips" pledge. The great sin was that the very people who helped push the S&Ls over the cliff: the Keating 5, Neil Bush, the Clintons ... all walked away scot free.

The bank issue was set off when FNMA, etc. mortgage backed security bundles were assumed to have the same preferential treatment as US treasury bonds, and no adjustments to equity requirements, loan loss reserves, etc. were made when those mortgages were watered down in an attempt by congress to make home ownership easier. In effect, the mortgage bundles were progressively degraded to junk-bond quality but pushed onto banks as good as gold securities. When the revelation hit that the value of mortgage pools and their derivatives were worth less than presumed, they plunged in market value, forcing some banks into immediately insolvency, having to start calling in and limiting commercial and consumer loans and anything possible to put the market value of assets in line with deposits. That created a secondary crisis with interbank confidence. There's an assortment of between-banks activities that assume all the banks are on solid ground, but a crisis when that can't be taken for granted.

As I recall, Greenspan tried repeatedly to warn congress for years but was ignored. Congress and regulators were reluctant to mark down the quality of those mortgage backed bundles because if they did that, banks wouldn't buy them. When default risks go up, banks have to adjust reserves to cover the increased default and regulators have to increase equity requirements of the owners so that the bank owners have to cover the losses before the FDIC covers for them.

To back up another step, before the S&L crisis there was a Farm Credit crisis. Anyone remember why those Farm Aid concerts came to be?

So really, 3 financial meltdowns in a row, and all caused by the government trying to help. 1 and 3 they tried to help ordinary people, the S&L crisis, was more about the government trying to help politically connected investors (remember Whitewater?, Neil Bush, John McCain, etc trying to help that Keating gut?))


The reference to "workforce housing" is probably due to the connection between affordable housing and the rescue to core communities.

Bringing downtown back to life in many places has encouraged upscale housing there but ignored the housing need of the people who work there. Not to be confused with public housing. Except for maybe a few coops and condos, I don't think there will be much home ownership there. The movement is for lifestyle and community balance; i.e. parking, bike paths, grocery stores, green space, etc. And land use and zoning codes are being adjusted to facilitate that transition. Within 10 miles of where I live, two former private golf courses have been or are being converted into rental villages with restaurants, hotels, grocery stores, all walkable. The downtowns of all of our suburban communities are likewise in transitions. Enough to make me question if home ownership is still a part of the American dream in urban areas. Maybe still in smaller communities and towns. But what's left in infill big cities are degrading core communities begging to be revitalized (hmmm ... why does that song "Dirty Old Town" come to mind :) ?).


Does your city governments have a say-so in who can purchase/occupy residential properties? I believe this should have been an issue when resident were being turned into Bed and Breakfast rentals, upsetting neighbors and destabilizing neighborhoods.



I don't think it's a smart move for either the government or the buyers. Taxpayer monies can be used elsewhere, or not used at all if the state is in debt. It also increases the downside risk for the buyer as well as teases the buyer to borrow more. Run the numbers if the buyer has to sell within a year or two in a down market. Real estate commission plus money that has to be payed back tithe state could equal 12% plus of the selling price. Or just apply the supply-demand relationship. If the state encourages the increased demands it send prices up, so you are back to where it started.

It doesn’t say HOW proposes to do it. @dancingtongue

@jackjjackson Because, as the article states, neither she nor Trump have much leverage on the issue although both claim they will solve the issue. It is primarily a local and state issue, and what federal subsidy/economic penalty levers they have require Congress to act, not them. Trump is even vaguer on his solutions, so why pick on one side and not the other as well?

@Heartlander
But then they wouldn't need help with the down payment and not qualify for the state program.


Just between us 80 year olds -- do you really think capital gain penalties or greedy hopes of hanging on for another year's appreciation (having seen enough real estate bubbles burst in our lifetimes) are the major considerations on whether to downsize or move into assisted living communities?


Tracking the spend-down is standard, and understandable. I was reacting to the incredulity the interviewer had that she could have gone through all the money from selling her houses so quickly knowing full well she was paying for nursing home care all the while.


Exactly. People don't want to pay for taxes for universal health care, or are against universal health care because it is "Socialism/Communistm" (take you pick of the bumper sticker du jour). When reality is that we always have had it since hospitals (and to some extent, all providers) are required to provide a certain essential level of emergent/urgent health care regardless of the patient's ability to pay, and those costs are shifted to those who can pay. And Medicare and Medicaid do not pay full cost, so those costs are shifted as well. So those with health care insurance or paying out of pocket are being hit with higher bills, and as more and more employers cut back on the health benefits they provide, the costs get further shifted back to the private out of pocket payer. Add into that ER/Urgent care is one of the most expensive forms of health care and usage of them can be significantly reduced through preventive and primary care, which the uninsured postpone. And then the clencher is that most of those uninsured show up in the ERs of your public hospitals where the costs are shifted back to the property tax payers. So you wind up being taxed, but the costs have multiplied several times because (1) the costs haven't been spread over the largest base population base possible (which is the purpose of insurance) and (2) the emphasis is on providing expensive health care as a last resort rather than preventive and primary care to keep them healthy.. And as you say, the degradation with which elder care is provided to all but the rich is an abominable way to treat people for simply growing old.


Very little control over purchasers as far as I know, and most are chasing developers and providing incentives because the State is now demanding them to relax zoning laws and build more affordable housing; while existing residents who vote for them are resistinng -- the so-called NIMBY movement. And the local communities are hamstrung financially when it comes to creative solutions because Prop 13 largely cut off their major revenue stream -- property taxes -- and shifting funding to the State level.

@dancingtongue


But providers/hospitals learned how to milk the system. How easy would it have been to put an urgent care clinic 2 or 3 doors down from the ER admissions with a sign pointing to the urgent care. Confused over whether you have an emergency of an urgent care need? A screening nurse could help you decide which. Someone with insurance show up at the ER and they likely leave with a $10K bill at least. At the urgent care that bill would be more like $200. Have insurance? Which would a provider prefer that you go to?

Oh? but what about the uninsured showing up at the ER. Duhhhh??? anyone notice that hospital corporations have built new hospitals in the far reaches of suburbia and closed inner city hospitals where the poor live?

Is this unrelated to the issue in discussion? Yes? Maybe? Or how about a universal acceptance to the reality that when the governments starts handing out cash or planting a heavy footprint, greedy hands will show up to take advantage of freebees or find a way to advantage the system in their direction. Am I implying that government has no role in serving the common good? No way! It's more like I object to government squandering its resources and too often failing to serve the common good.

@Heartlander Universal health care does not have to be run by the government. In fact the Affordable Care Act is based on private health care providers, and actually had provisions to incentivize them moving from fee-for-service -- a piece-rate system that encourages running up the bill and providing unneeded care -- to developing payments by treatment modalities with higher payments for best practices in terms of both quality and service. But the only way such a platform works is if all people are insured, not just the sick and injured. And how do you do that other than mandating coverage, as we do with automobiles? Why can government mandate insurance for our cars -- which, BTW has led to some cost reductions and improvements in auto repair -- but not our bodies? And the great irony is that the Affordable Care Act is built on the recommendations of the Heritage Foundation, a conservative think tank, and the conservatives and MAGA crowd have been trying to scuttle it and prevent its full implementation even before it passed Congress.

Medicare for all and Medicaid for those lacking money. @dancingtongue

A two tiered system so you have presumably paid and will pay and an illegal alien who has and will pay zip will NOT get the same level of care WE get Scandinavian level of care they get the Yemen level if that and sterilization included. . @Heartlander @dancingtongue

@jackjjackson Medicare is paid for through payroll taxes, which will have to increase to include all, doesn't begin to approach the level of health care provided by Scandinavian and other developed countries around the world, and is based on the same financial disincentives of the fee-for-service sector when it comes to quality, efficiency, and service. Undocumented immigrants actually subsidize both Medicare and Social Security currently since they pay the payroll taxes through their phony SSA numbers and seldom collect any of the benefits for risk of being discovered.

@dancingtongue O' geez ... am not big on mandated auto insurance. It's more a tool for locking poor people in poverty and cutting off tha escape path. Liability insurance is a good idea to protect one's own assets, but if you have no assets to protect you are really paying to protect someone else's assets or their insurance company. What was wrong with the old uninsured motorist insurance? Public roadways belong to the people, conditioning their use to just people who can afford to buy insurance isn't fair,

The Affordable Care Act was shit piled on a shitty system and had little to do with affordable care beyond protecting providers and turning more employees into wards of their employers. A $2,000+ deductible for someone who is dirt poor doesn't make a visit to a clinic affordable. I'm for universal health care but since HRC reared her ugly head on this 25+ years ago, Democrats have been heading in the wrong direction. Health insurance isn't health care. Then when husband Bill added the part about exempting providers and insurance companies from anti trust it was the setup for screwing the people. A guarantee that people with $$ in hand and OK with simply paying for their own health care services were going to get fucked over and forced to buy health insurance or pay a severe penalty. Amazing, a system where insurance PREMIUMS are 100% deductible if paid by employers, yet when someone pulls out their wallet and pays hard cash it's rarely deductible. A system that favors paying for insurance rather than paying for health care.

It's like a public school system where parents would have to buy education insurance before enrolling their kids in a private school, and what subject matters your kids can take are managed by the insurance company.

Universal health care needs to be paid for like we pay for public schools. And should be managed and run by something comparable to how our school districts pay for teachers and school building, etc. And like with public schools, we should be free to get our health care from private providers without interference by the government, much like government isn't in the loop when parents send their kids to a non-public schools. Universal health care rather than universal health care insurance. A big difference.

Opps, sorry for departing from the California loan to first time homebuyers discussion :) Too many windmills at once.

So few words so many lies. @dancingtongue