As California faces a housing crisis, California Governor Gavin Newsom is planning on spending $331 million from a settlement with mortgage lenders on legal aid for homeowners and renters, The Orange County Register [1]reports. However, courts have stated that the money must be spent on housing assistance and consumer protection programs.
“The middle class, and those that aspire to get in it, are being slammed because we have been unable to produce enough housing, to prevent evictions and foreclosures,” Newsom said.
Newsom’s plan is to give the money to nonprofits that help Californians facing foreclosure or evictions, keeping in line with the court’s decision.
Despite being less affordable than its long term norms, a report from Black Knight earlier this year revealed that California affordability has improved significantly. It now requires 34% of the median income to purchase the average home in California, down from 38% in November. Black Knight notes that California went from having one of the top five home price growth rates of any state (8.6%) one year ago to second-to-last as of June 2019, at 1.3%.
To combat the ongoing affordability issues, some California cities are considering an “empty homes penalty,” also known as a vacancy tax. Voters in Oakland, California recently approved Measure W, a tax of as much as $6,000 per parcel and $3,000 per condo unit on properties occupied fewer than 50 days per year. The tax is expected to bring in around $10 million per year, which is intended to go toward homeless services and new affordable housing, Capital and Main reports.
Proponents of these vacancy [2] taxes say that they will improve access to affordable housing by keeping speculators from sitting on them until they can rent them for a higher rate, or sell them at a greater profit when prices inevitably increase. Opponents say that the key to affordable housing isn’t taxes, but the revising of zoning to build more housing.