On January 7, the council will consider a city ordinance to create a Down Payment Assistance (DPA) Program—an initiative that can open doors for first-time home buyers, particularly young families who can afford mortgage payments but struggle to save for a down payment.
DPA programs bridge this gap, offering loans that help families achieve the stability of home ownership and the potential for wealth building through property appreciation. Proven successful in other cities, DPA programs promote workforce housing, increase diversity, and offer a critical step toward addressing economic inequities.
These programs are flexible—structured as repayable loans or equity-sharing agreements—and the payments plus interest, equity or both are paid back into the City Housing Trust Fund, creating a sustainable cycle of assistance. Prioritizing workforce families who live and work locally could also reduce greenhouse gas emissions by shortening commutes.
With Measure Q’s passage in November, the city will have access to $11 million yearly in new funds. While there are many critical needs in our city, both our Housing Element and the Housing Trust Fund Appendix A of the Housing Element acknowledge the need for supporting first-time home buyers. Allocating $1 million yearly to the DPA program could support 50 families with a $20,000 DPA—an impactful investment that strengthens our schools, diversifies our community, and enables wealth-building for those often excluded from home ownership opportunities.
Carpe diem—let’s seize this moment. Join Interfaith Housing Justice Davis and urge the council to create and fund a Down Payment Assistance Program. Together, we can make home ownership a reality for more Davis families.
I took a quick look on Zillow and there are three properties with at least 3 bedrooms below $600,000 and list price that are not in Rancho Yolo. An estimated traditional mortgage would be around $4000 a month today.
The above proposals is subsidizing demand in a highly supply constricted community. I’ve been commuting to Davis daily for 14 years from Sacramento and above mortgage price is still outside of my range of what my family can afford with two kids and professional jobs between my partner and I.
For those lucky few that may get that $20,000, it would surely help them however it would be a nudge to continue to raise prices for everybody else not lucky enough to be one of the 50 families to get that subsidy lottery ticket.
It’s still confuses the heck out of me by why not every city leader and activist in this wealthy high opportunity town tries to work towards building enough homes so all community members can live here not just those that make enough to afford a $4000 a month mortgage. Trump won because many people in California can’t afford to live here and subsidizing demand will have a lucky golden ticket for a few people while raising prices for everybody else.
Don, with respect to your final the problem I have with the proposals thus far is that they aren’t proposing building houses that are small enough to have sale prices in the below $600,000 price range. They pay lip service to affordability while building houses with price tags well over the current Davis sale price average reported by Zillow of $870,650. There is no reason why the First Time Buyer subsidy of $20,000 can’t go toward the purchase of a $600,000 home … and ideally (in my highly biased opinion) it should.
Yes, it would be very unlikely developers today would be proposing units at regular market rate below $600,000 in Davis for many reasons. However if many homes of all types were built there’s a filtering effect where the supply becomes larger and people who can afford the more expensive homes take those new fancy houses and the often older and smaller ones have their prices not increase or go down. Hypothetically if 1000 homes were up for sale in Davis today and they were new homes, the overall market would be significantly affected where prices would go down across-the-board. Cities like Minneapolis and Austin have seen prices go down and lower rent because they decided they should not restrict housing supply unlike Davis and most of coastal California
Don, regarding the filtering effect, that happens in a classic supply/demand marketplace that is in balance. Because of the massive amount of regional demand for high priced houses in Davis, the Davis housing landscape is neither a classic supply/demand marketplace, nor is it even close to being in balance. As a result there will be no filtering.
Further, as Keith Echols has pointed out time and time again, the very high $ per square foot costs of new houses in Davis drives the $ per square foot of existing resale houses up rather than down … as realtors use the new house $ per square foot costs as comparables for their resale listings.
That sets the asking price, but it only accounts for half the equation. The other half is if I have choices, I can drive the selling price down whereas if the seller has 35 offers, they pick the highest price – see how that works?
I am waiting for the sliced and diced numbers from Zillow, and when I get them I believe they will show that Davis has as much inventory/choice in the over $800,000 price bracket as Woodland, Dixon, West Sac, Winters. Where Davis is missing choice is in the missing middle where prices are between $600,000 and $800,000, as well as the truly affordable price range below $600,000.
But is that the proper comparison? After all a home in Woodland that cost $800,000 is quite a bit larger than a home in Davis that cost the same. It seems to me they’re trying to make that kind of comparison is ignoring a big part of that factor
David, when you go out home shopping what is the first question you answer … What can I afford? What is my budget? It is also the very first question that a real estate agent asks when a new client comes into their office looking to buy.
For most people those are the first two questions they ask when embarking on any major purchase.
I would also argue that Woodland and Davis are two parts of the same real estate market. When Landon and I were house shopping in 1998 we looked at houses in Land Park, Curtis Park, and East Sacramento across the causeway, and in Davis and Woodland and Vacaville on this side of the Causeway.
David, one other point about size, if you look at the household demographics of the people who bought new houses in The Cannery or bought resale houses elsewhere in Davis, what is the typical number of household members … two persons. Given the birthrates across the US the proportion of families with more than two children is very very small. That begs the question, for a two-person household why does largeness matter? For empty nesters isn’t the expression Less is More germane?
Matt 1: “the very high $ per square foot costs of new houses in Davis drives the $ per square foot of existing resale houses up rather than down”
David 1: Supply and demand
Matt 2: “Davis has as much inventory/choice in the over $800,000 price bracket as Woodland, Dixon, West Sac, Winters. ”
David 2: It’s more expensive in Davis but you get a bigger house for the same price in Woodland
Matt: Some story about buying a house with his wife
Matt: Something about two family households
I’m not following this train here. What do your last two points have to do with your first two statements.
Not two family households … two person households. Two spouses or two significant others.
The point is that with only two persons in a household, greater size of the house is quite often a negative. It simply results in more space to have to keep clean … space that you never use.
Now with that said, here are the Zillow sale numbers for Davis, Woodland, Winters and West Sac over the last 23 months. The picture they tell is crystal clear. Davis has 78.5% of the sales over $1 million and 63.3% of the sales between $800,000 and $1 million, but only 9.2% of the sales under $600,000. The proportions of sales in the $600,000 to $800,000 bracket rather closely mirrors the population percentages of the three large cities. Bottom-line there is no shortage of homes in the two price ranges over $800,000 but a paucity of homes under $600,000.
January 23- current (12/5/24)
Davis
0-600,000 111 sales, avg list price $491,622 … 16,5%
601-800,000 192 sales, avg list price $704,567 … 28.5%
801-1,000,000 162 sales, avg list price $896,569 … 24.1%
1,000,000+ 208 sales, avg list price $1,309,887 … 30.9%
Woodland
0-600,000 513 sales, avg list price $482,285 … 66.9%
601-800,000 199 sales, avg list price $680,665 … 25.9%
801-1,000,000 43 sales, avg list price $881,306 … 5.6%
1,000,000+ 12 sales, avg list price $1,326,042 … 1.6%
Winters
0-600,000 62 sales, avg list price $552,719 … 33.0%
601-800,000 105 sales, avg list price $667,532 … 55.9%
801-1,000,000 11 sales, avg list price $1,004,132 … 5.9%
1,000,000+ 10 sales, avg list price $1,573,900 … 5.3%
West Sacramento
0-600,000 527 sales, avg list price $461,929 … 62.7%
601-800,000 239 sales, avg list price $682,280 … 28.4%
801-1,000,000 40 sales, avg list price $891,428 … 4.8%
1,000,000+ 35 sales, avg list price $1,336,735 … 4.2%
———————————
0-600,000 Davis 111 sales, avg list price $491,622 … 9.2%
0-600,000 Woodland 513 sales, avg list price $482,285 … 42.3%
0-600,000 Winters 62 sales, avg list price $552,719 … 5.1%
0-600,000 West Sac 527 sales, avg list price $461,929 … 43.4%
601-800,000 Davis 192 sales, avg list price $704,567 … 26.1%
601-800,000 Woodland 199 sales, avg list price $680,665 … 27.1%
601-800,000 Winters 105 sales, avg list price $667,532 … 14.3%
601-800,000 West Sac 239 sales, avg list price $682,280 … 32.5%
801-1,000,000 Davis 162 sales, avg list price $896,569 — 63.3%
801-1,000,000 Woodland 43 sales, avg list price $881,306 … 16.8%
801-1,000,000 Winters 11 sales, avg list price $1,004,132 … 4.3%
801-1,000,000 West Sac 40 sales, avg list price $891,428 … 15.6%
1,000,000+ Davis 208 sales, avg list price $1,309,887 … 78.5%
1,000,000+ Woodland 12 sales, avg list price $1,326,042 … 4.5%
1,000,000+ Winters 10 sales, avg list price $1,573,900 … 3.8%
1,000,000+ West Sac 35 sales, avg list price $1,336,735 … 13.2%
———————————
Total for Davis 673 sales … 27.3%
Total for Woodland 767 sales … 31.1%
Total for Winters 188 sales … 7.6%
Total for West Sac 841 sales … 34.1%
65,054 Population for Davis … 34.3%
61,174 Population for Woodland … 32.2%
7,694 Population for Winters … 4.1%
55,842 Population for West Sac … 29.4%
“ Bottom-line there is no shortage of homes in the two price ranges over $800,000 but a paucity of homes under $600,000.”
Based on what? That seems like a gigantic leap based on nothing. The problem is that you would expect there to be a higher percentage of more expensive housing in Davis, because it’s more expensive to buy housing in Davis. So what does that data actually prove? Moreover, you end up with a circularity problem – it’s more expensive to buy housing in Davis, so you have a higher percentage of more expensive housing, and you have a higher percentage of more expensive housing because you have a demand that greatly exceeds supply. Hence the circularity. Also you implicitly assume that the other markets have enough housing to begin with, but you have failed to establish that. It’s a mess. You’re not doing a systematic analysis here.
David you are ignoring the nose on your face. What the numbers clearly show is that what Davis needs is homes under $600,000. You want to ignore that reality and cater to the buyers of over $800,000 homes. That perpetuates tha classist history of Davis, and does nothing to provide housing for the current population of Davis workers who have to commute to their jobs every day. Davis needs to provide incentives for the building of affordable homes not platitudes for the building of unaffordable homes.
I don’t dispute the first point – Davis clearly needs homes under $600K.
That point is beyond dispute. However, that ignores a lot of other important questions including how to get there and also whether Davis has enough housing period, market rate or affordable, and I would argue that it doesn’t. A comparison to other communities doesn’t necessarily cut it because they may well not have enough housing either.
The other point I would argue is all your analysis actually showed is that Davis is more expensive than Woodland, et al. Which is to say, the sky is blue.
You keep ignoring the fact that the ability to financially afford to purchase is the most important characteristic of a home buyer.
Financial ability is also the key determinant when measuring social justice in housing. RHNA uses income in its Very Low, Low, Moderate, and Above Moderate categories.
Financial ability is also the key determinant when a Davis worker decides whether to add to Greenhouse Gases by commuting to their job in Davis.
The numbers show that Davis does a good job of providing housing opportunity for people with lots of financial ability, but a lousy job of providing housing opportunity for people who don’t have lots of financial ability.
The way to fix that is to build housing that is affordable for the people who work at our local hotels, wait tables at our restaurants, provide service to the customers in our retail businesses, make our local hospital run smoothly, teach our children, and wear an orange vest when providing City services.
The City can do that by creating ordinances that incentivize developers to design and build homes that sell for between $500,000 and $700,000.
“The City can do that by creating ordinances that incentivize developers to design and build homes that sell for between $500,000 and $700,000.”
And what I think you’re ignoring is that somehow those houses have to be built in a market where the market rate is considerably higher than that and in a system that doesn’t have the resources to mass subsidize. That’s why Village Farms is looking into subsidizing a small number of homes to reduce the costs. But even that is limited. So how is the city going to do what you are proposing?
David, I am not ignoring that “those houses have to be built in a market where the market rate is considerably higher than that” The most direct way impact the market rate price for a new home is to build it smaller.
For example, the reported median listing price of the eleven (11) homes listed in West Davis is currently $812,000 and the price per square foot is $500.00. Simple math says the average square feet in those 11 homes is 1,624. If a new home is built with 1,524 square feet the $812,000 market price comes down to $762,000. At 1,424 square feet it drops to $712,000. At 1,324 square feet it drops to $662,000. At 1,224 square feet it drops to $612,000. At 1,224 square feet it drops to $562,000. At 1,124 square feet it drops to $512,000.
The City can establish incentives for developers building homes with no more than 1,100 square feet and a per square foot price of no more than $500.00. When I grew up an 1,100 square foot house was pretty normal. Levittown, NY is a community that was built with all the houses at 900 square feet plus or minus.
In an overheated market like Davis, your hypothetical doesn’t ring true to me. I can see building several thousand new detached single family houses in Davis and not moving the needle at all. The notion that older houses will be worth less also doesn’t make sense here. The older houses are in neighborhoods closer to downtown and the University and in well-forested neighborhoods. I don’t believe the Cannery has any houses worth more than 40+ year old detached houses in most of our neighborhoods. I’d love to see a technical expert in market dynamics weigh in on this.
Agreed 100% Alex. The needle would not move at all.
We could move the needle by adding supply of all types. UC and Davis have built enough to move from under 1% vacancy to around 2.5%. Every house built moves the needle even if it does so infinitesimally. Denying that defies basic economics.
Ron it defies the basic economics of an in balance marketplace, but Davis is anything but an in balance marketplace.
No Matt. Every increment of supply puts pressure on price. Everything else included. You build to infinity and eventually the price would go to zero.
The problem with the idea that if we build x amount it won’t make a difference is you guys make up x without any real market knowledge. What we do know is that adding supply has a moderating effect on price. How much we build determines that effect but denying that the effect exists is easy for you to say when you have a home and don’t care about anybody else.
Ron, your knowledge of Microeconomics is faulty. In an out of balance market … no matter which direction it is out of balance, the addition of units on the deficient side of the imbalance does not make any meaningful change in price. When the overabundance is on the supply side, factors other than supply/demand determine the price. Same with an overabundance of demand.
Since you haven’t been able to get this reality of the Davis marketplace so far, here is a more in depth explanation
There are five fundamental principles of supply and demand:
(1) If supply increases while demand remains constant, price decreases.
(2) If supply decreases while demand remains constant, price increases.
(3) If supply is static while demand increases, price increases.
(4) If supply is static while demand decreases, price decreases.
(5) Consumer information about supply can skewed, with the result that changes in information affect demand.
Your focus is on (1), but you are ignoring (5). The Davis Housing Demand is driven by a combination of many factors, one of which is that there are over 250,000 living UCD alumni, the vast majority of whom do not live in Davis. Another is the continuing flight of Bay Area residents from the Bay Area. A third is the ever rising number of retirees looking for a good community to retire to.
With the approval and building of new housing comes a constant stream of information that impacts the level of active demand … in many cases converting latent demand to active demand. That is particularly the case for the UCD alumni and the Bay Area expat wannabes. The information about the impending new housing in Davis gives them new incremental hope that moving to Davis (back to Davis for the alumni) has a much higher likelihood of happening. As a result the increase in supply produces an increase in active demand and that change in (5) affects what happens in (1)
Your
Interestingly enough we have been discussing latent demand in the I-80 widening debate. Part of that discussion has centered on how improvements to a highway — especially capacity improvements (adding a fourth lane in the case of I-80) — results in more traffic choosing to use the road than would be the case if the highway were not improved.
Thank you Don and Matt for taking the time to read and comment on my article. Matt, you are correct that a Down Payment Assistance (DPA) program alone will not solve the housing crisis in Davis. It needs to be paired with incentives by the city for builders to build smaller more inexpensive units like attached townhouses, duplexes or quadplexes on smaller lots which would be more attainable for the first time home buyer. Until the supply of smaller units increases, even the price of the smaller units will be too high. That said, a DPA program could still be a useful tool to help getting a first time homebuyer into that first home.
This is definitely worth a try. Obviously more inventory is needed to make it really successful. But it’s self-sustaining and could help bring in more families and local employees.
I assume that most first-time home buyers are not purchasing newly-built homes. There aren’t many starter homes in Davis, but there are some.
Coupled with the down payment assistance program being proposed at Village farms it might help some people out.
Of course you guys ignore the PPIC finding that we need more supply of all types of housing. Adding supply ameliorates demand driven prices.
Regarding “So how is the city going to do what you are proposing?” Market-rate, un subsidized townhouses and duplexes in Davis (i.e. attached units) appear on Zillow for between $550,000 and $650,000. The fixation on a DETACHED house and the notion that it’s possible to build enough of those in Davis to affect their prices is limiting our solutions. HOW the City can incentivize more attached houses is definitely a conundrum, and hopefully that will become more of the discussion going forward.
Matt, you have now written thousands of words and I have no idea what point you are trying to make about the down payment assistance program that is the subject of this article.
Don, I strongly support a down payment assistance program as long as it does not repeat the sad history of past City of Davis housing affordability programs where the dollars put into those programs were squandered on administrative/overhead expenses. The down payment assistance program contributions (by the City and by private donors) should be put into a restricted Fund with the clear rules that 100% of the funds therein must go to buyer assistance payments.