California’s housing bubble has pushed prices so high (the median Californian home sells for double the national average) that, in some cities, 48% of first-time buyers could only afford to purchase their homes because their parents gave them the downpayment.
Where do the parents get the money? By remortgaging their own homes. Which parents don’t have homes? Black parents. The official policy of redlining systematically denied home ownership to blacks for decades, creating a legacy of multigenerational wealth inequality that made Black parents statistically less likely to be able to subsidize their kids’ downpayments.
If your parents can’t afford to front you money for a house, you’re forced to rent, and your landlord is increasingly likely to be a Wall Street Slumlord like Blackstone subsidiary Invitation Homes, who gouge on rent and skimp on repairs, in order to maximize returns on the Single-Family Rental Securities (SERS) they’ve sold to the investor clas.
As USCs Lusk Center for Real Estate director Richard Green says, “It’s almost like we’re feudal now. You inherit the manor from your family if you happen to be a landowner. If you’re not a landowner, it’s really hard to get in.”
For those who don’t have relatives in a position to help, owning a house in California can feel unachievable.Stephanie Pavón has been renting in Northeast Los Angeles with her husband Fernando for about six years. The couple has a 15-month-old son. They’ve considered buying a house. But Pavón said even with their decent incomes, they can’t save up enough for a down payment.
“A big factor in our staying where we are is that we don’t have assistance from other family,” said Pavón.
They’ve watched prices in their neighborhood skyrocket. A three bedroom house on their street recently sold for $1 million. Another house in the area — barely bigger than their apartment at 789 square feet — is on the market for $499,000.
“There are so many people like myself who can’t afford to live in a house like this. And I do wonder who can,” she said.
Where do people get money to buy California homes these days? Often, from mom and dad [David Wagner and Aaron Mendelson/KPCC]
(via Naked Capitalism)