California remains among the most expensive housing markets in the country.
The median price for a home in June was $352,000 statewide, according to Data Quick. The income needed to afford this house would be about $135,000 annually. Of course, median income is nowhere near that -- less than $60,000 a year.
Not surprisingly, a preschool teacher earning an annual salary of $30,000 and a construction worker earning $39,500 struggle to find an affordable home to buy or rent. So do senior citizens on fixed incomes, veterans returning home from war and anyone earning minimum wage.
We have to figure out how to produce affordable housing for those who are on fixed incomes or working at lower-wage jobs.
This task has become more urgent since voter-approved housing bonds from 2002 and 2006 that provided $500 million a year have run out. And the Legislature and Gov. Jerry Brown eliminated redevelopment agencies as of 2012 -- which had been required to allocate 20% of tax-increment monies generated in redevelopment districts for affordable housing, totaling about $1 billion per year.
How to replace that $1.5 billion a year to produce affordable housing of the future -- and leverage private bank loans and federal funds?
Of 47 states and the District of Columbia that have housing trust funds, the most common revenue source is a real estate transfer tax tied to the value of the property -- but that is vigorously opposed by the California Association of Realtors. The second most common source is a document recording fee.
Senate Bill 391 by Sen. Mark DeSaulnier, D-Concord, would put a $75 document recording fee on real estate transactions such as refinancing -- but, to allay industry opposition, excludes home and commercial property sales. Raising an expected $300 million in low-activity years and $700 million in high-activity years, this would allow the state to add an average of 10,500 affordable apartments and single-family homes annually.
This is worth supporting, has a nexus to housing and is in line with how other states fund affordable housing.
The Senate passed SB391 in May. Now the bill goes to the Assembly, which holds hearings today and Wednesday.
This bill should garner support from both Democrats and Republicans. Builders and almost every major business association across the state support SB391. The California Bankers Association, which opposed the idea in the past, has taken a neutral position.
The powerful Realtors association opposes the bill, though it supported a similar bill last year, making this an uphill battle. Legislators should ask, if not a document recording fee, what source would you support to raise enough funds to do right by Californians in need of affordable housing?
The Assembly should champion SB391 on a bipartisan basis to reduce the number of California households that are priced out of the market.