California Voters Set To Decide on $25 Billion Program for Homebuyers—and Billionaires Tax

California voters will soon determine whether or not to undertake several big housing reforms when they go to the polls in two weeks.

The California ballot contains three significant propositions that aim to aid homebuyers, if approved by a majority of voters on Nov. 3. These programs—a bond measure, a homebuyer program, and an update for environmental reviews—address different parts of the housing world.

Those measures will appear alongside a proposed wealth tax, which is opposed by California Gov. Gavin Newsom and has stirred up controversy in the Golden State.

California earned an F grade on the Realtor.com® State-by-State Housing Report Card, which tracks how effectively each state balances affordability and new construction.

Proposition 37: A $25 billion homebuyer program

Proposition 37 creates a $25 billion loan program for middle-income buyers to purchase new homes.

The state would issue bonds and use the proceeds to offer fixed-rate mortgages on a new home that's less than $1.5 million. Borrowers must be California residents who pay at least 3% down and meet some income requirements.

The California Association of Realtors supports the measure and is its largest benefactor, according to the CalMatters.

CAR President Tamara Suminski told Realtor.com that even young people with good credit struggle to afford the down payment required in many markets.

“Every day, we hear from middle-class Californians who simply want a fair shot at homeownership for themselves and their families—but affordability continues to stand in the way,” Suminski said. “By providing down payment assistance loans—at no cost to taxpayers—this measure tackles one of the biggest barriers and brings the dream of homeownership closer to reality.”

If approved, the California Housing Finance Agency would be able to borrow the $25 billion by selling bonds to private lenders. Then it would lend that money to buyers, who would then repay the loans with interest. The lenders would be on the hook if the buyers don't repay.

A few groups oppose the bill, including the Hoover Institution, which argued that the state could face political pressure to bail the program out if a lot of homeowners don't repay.

Proposition 45: Setting a stopwatch for environmental reviews

Proposition 45 would set timelines on environmental reviews for some projects under the California Environmental Quality Act, or CEQA. These new requirements would expedite environmental review and court challenges to projects.

Supporters argue the measure will prevent not-in-my-backyard interests from delaying projects endlessly with red tape. Opponents argue it could hamstring the state's environmental protections.

This issue has drawn $60 million in campaign spending, two-thirds in support. Supporters include building industry groups, homebuilders, and CAR. On the other side, environmental philanthropist Wendy Scmidt put $10 million into the opposition as well as other environmental groups, according to CalMatters.

CAR supports the measure, said Suminski. "We just cannot meaningfully address affordability without building more homes. It's just basic economics, supply and demand."

The measure "directly addresses the affordability crisis," Jennifer Barrera, president and CEO of the California Chamber of Commerce, said at a recent press briefing supporting Proposition 45.

Barrera noted examples of projects delayed for years amid environmental impact reports and persistent resistance from neighbors, including a 34-unit housing development in Marin County that took 40 years to get approved.

"All we say is, you have to make a decision within a reasonable time frame," Barrera said, adding that it doesn't prevent public feedback for projects, only compels their timeline.

Carolyn Coleman, executive director and CEO of the League of California Cities, said her board did not reach agreement on whether or not to support the measure.

The balance isn't quite right between protecting environmental quality and using CEQA to delay projects indefinitely, Coleman said last week at a forum hosted by CAR.

Proposition 1: A new affordable housing bond

Proposition 1 would authorize California to issue $11.25 billion in bonds to support housing affordability programs. That includes multifamily rental housing, permanent supportive housing, and affordable housing. The funding backs both down payment assistance programs and mortgage programs for veterans.

The last time California voted on such a measure was March 2024, when voters approved $6.38 billion for bonds. That supported homelessness and veterans housing programs.

Newsom backed the measure, and so did the Democratic Party of California and a spate of its leaders. CAR is neutral on the measure.

"Prop 1 is a no-brainer. The state does not have enough ongoing funding that is committed to affordable housing," said Chris Hoene, executive director of the California Budget & Policy Center, which doesn't take a position on Prop 1. "The last housing bond is out of money."

Proposition 40: Concern for the 'wealth tax'

California groups such CAR said they're concerned about Proposition 40, which would create a one-time 5% wealth tax on individuals with a net worth above $1 billion.

The Service Employees International Union–United Healthcare Workers West, which backed the measure, said it could offset federal funding cuts. On the other hand, the National Taxpayers Union Foundation wrote that it would affect about 200 people in the state. It projects that California could collect $40 billion but lose $25 billion due to loss of other taxes.

Proposition 40 excludes real property holdings from determining an individual's net worth. Nonetheless, CAR opposes the measure, Suminski said, because it's worried about loss of tax revenue and the state's economic competitiveness.

Newsom opposes the measure, and billionaires in the state have put significant money toward a legal fight. The tax could trigger some of them to flee the state.

"It is a bad policy to basically go after a targeted group that has the ability to leave," Barrera said. "When they leave, they do not come back."