SACRAMENTO, Calif. — California voters will decide in November whether to authorize more than $36 billion in housing bonds through two ballot measures aimed at different dimensions of the state’s affordability crisis: building subsidized housing and helping middle-income Californians purchase newly constructed homes.
Proposition 1 would authorize $11.25 billion in state general obligation bonds for affordable housing and homeownership programs, while Proposition 37 would allow the California Housing Finance Agency to issue up to $25 billion in revenue bonds to finance down payment assistance for qualifying buyers of new homes. The state Legislative Analyst’s Office confirms those amounts and financing structures.
The two measures, examined in a Mercury News op-ed by Ethan Varian, approach California’s housing shortage from different directions.
Proposition 1 would direct $7.2 billion toward programs that provide grants and low-interest loans for the acquisition, construction or renovation of affordable rental housing. The Legislative Analyst’s Office estimates the bond could subsidize as many as 40,000 multifamily rental units while helping up to 40,000 households through homebuyer assistance, housing production and home repairs.
Another roughly $1 billion would support mortgage assistance for first-time homebuyers and other homeownership programs, while much of the remaining funding would support housing programs benefiting farmworkers, students, tribal members and veterans.
The bond would carry a significant long-term public cost. The Legislative Analyst’s Office estimates Proposition 1 would require between $500 million and $600 million annually for approximately 25 years to repay the housing bonds.
David Garcia, policy director at UC Berkeley’s Terner Center for Housing Innovation, which does not take positions on ballot measures, told the Mercury News that Proposition 1 would replenish state programs needed to “continue building affordable housing throughout California.”
Chione Flegal, executive director of Housing California, which supports Proposition 1, said tens of thousands of affordable housing units are now “shovel-ready” following changes in state housing laws but still require financing to begin construction.
“You have both an incredible need and the conditions to actually get building quickly,” Flegal said.
The financing challenge is illustrated by a proposed 500-plus-unit affordable housing development at 71 Vista Montana in San Jose, where efforts to develop the city-backed project have repeatedly stalled because of funding problems.
California voters last approved a dedicated statewide affordable housing bond in 2018, authorizing $4 billion. Voters in 2024 also approved $2 billion for housing for people experiencing homelessness as part of a $6.4 billion mental health bond.
Gov. Gavin Newsom, Democratic mayors and state lawmakers have backed Proposition 1.
Opponents contend California should not assume additional long-term debt while the state faces projected budget deficits.
The Howard Jarvis Taxpayers Association opposes Proposition 1 and argues housing expenditures should instead come from the state’s existing budget.
“The more you pile this debt on, the more difficult the budget process is,” spokesperson Susan Shelley told the Mercury News.
The Proposition 1 campaign has raised at least $8 million from donors including affordable housing developers, civic foundations and construction unions, according to the Mercury News. No opposition campaign has been registered.
Proposition 37 takes a different approach, creating a state program designed to help middle-income Californians overcome one of the most significant barriers to homeownership: accumulating enough money for a down payment.
The measure would authorize CalHFA to sell up to $25 billion in revenue bonds and use the proceeds for what the Legislative Analyst’s Office describes as a “middle-class homeownership loan.” The program could lend buyers up to 17% of a home’s purchase price, while buyers would be required to contribute at least 3%.
The assistance would be limited to newly constructed homes, including houses, condominiums, townhomes and manufactured homes.
Participating households could earn no more than twice the median income in the area where the property is located, adjusted for household size. Home prices would also be subject to limits based on location.
Former Los Angeles state Assemblymember Bob Hertzberg, who developed the measure, said its purpose is “to create generational wealth” while giving more Californians “the opportunity to move from being renters to being homeowners.”
Unlike many traditional down payment assistance programs, Proposition 37 would apply exclusively to newly constructed homes. Supporters contend that restriction could simultaneously help buyers and create additional demand for new housing construction.
Garcia said the measure could assist Californians who earn enough to qualify for a mortgage but have been unable to accumulate a conventional down payment, while also “creating demand for builders to build new housing.”
The measure also contains changes to construction-defect liability rules for developers participating in a qualified builder program. Those provisions are intended to address concerns that existing liability rules have discouraged condominium construction.
Supporters estimate Proposition 37 could generate more than 190,000 new homes statewide, but the Legislative Analyst’s Office cautioned that the measure’s effect on housing production remains uncertain.
Among the unresolved factors are investor demand for the bonds, the cost of loans compared with other down payment programs and whether the program ultimately increases home construction and purchases.
The initiative directs CalHFA to keep borrowing costs for participating homeowners as low as possible, but the eventual interest rates and other repayment terms have not yet been established.
Unlike Proposition 1, Proposition 37 would not rely on the state General Fund to repay its bonds. Homeowners participating in the program would make payments intended to repay bond investors and cover administrative expenses, and the Legislative Analyst’s Office projects no direct state or local government costs.
The League of Women Voters of California opposes Proposition 37, citing uncertainty about borrowing costs and the measure’s failure to prioritize first-time homebuyers.
“California needs homeownership programs that lower families’ total costs, confront racial barriers to building wealth, and support strong communities,” the organization wrote in its ballot recommendation. “Prop. 37 does not meet that test.”
The Proposition 37 campaign has raised more than $22 million from donors including the California Association of Realtors and construction unions, according to the Mercury News. No registered opposition campaign has been formed.
Both measures currently have majority support among likely voters, according to a September survey by the Public Policy Institute of California.
The survey found 55% of likely voters would vote for Proposition 1, compared with 43% opposed. Proposition 37 received support from 61% of likely voters, while 35% opposed it.
Each measure requires a simple majority for passage.
Together, the proposals would authorize more than $36 billion in housing-related bonds, but they represent substantially different policy approaches. Proposition 1 would use public borrowing to subsidize affordable housing and homeownership programs, with most repayment coming from the state General Fund, while Proposition 37 would establish a much larger loan program financed through revenue bonds repaid by participating homeowners.
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