To quote Mr. Fenkner... "Yeah, right. What could possibly go wrong?"
Does anyone remember good ol' Waters on the House Banking Committee when she accidentally stated "We Socialists" will make sure everyone has a house and an affordable loan.
Less than 2 years after her prophetic statement the entire US housing market crashed. With it, it took all of Canada, and Europe with it. It then rippled across the Pacific and hurt China and the Middle East.
If you don't get it you should. Socialism and Communism is the exact opposite of reality.
Ready for the author's final quote? "The official Voter Guide records that no argument against Prop 37 was even submitted. That silence is what a measure looks like when the people who would lose by its passage are not invited to a seat at Sacramento’s insider-only table."
The Democrats in Sacramento cannot even realize their own reality. They blame everyone else but themselves for failure.
So how about it Maxine? You don't live in your district. You made the on the record comment before the collapse caused by the Democrat Party and its failed Socialist policies.
Shhhh, Limon Pro-tem will not speak the truth. Greggy Hart runs from the truth.
Newsom who is supposed to lead the defunct party in Sacramento will not address the failure and collapse of the banking system and real estate because of the exact same policies.
I agree with Mr. Fenkner’s analysis. Further, this article provides a perfect opportunity to discuss the laws of physics for economics, I. e. for every action there is an equal and opposite reaction. In other words, when the government passes a law to financially benefit a defined group, there will be an equal or greater cost imposed on others. In most cases the cost will be greater because of the inefficiencies created by the law. Also, the government will hide the cost by imposing it on a larger group of people over a long period of time. This is how politicians “buy” votes.
Whenever a politician claims to be providing a benefit to a group of people, you must ask who is and how is the cost being paid. Benefits cannot be created with no costs.
The details of this bill sound like the return of a political favor or the one that demands the return of a political favor. No one would write this as-is without an agenda.
Upgrade? We are already killed by Fed and State income taxes and utility costs and taxes on our utilities, our property, sales taxes, taxes on our home gas, and water.
Taxes on our trash. Annual costs for our autos is a tax.
Just another huge payoff to the unions by the Democrats! This symbiotic relationship MUST end! I just can’t understand how people can’t see how this partnership they have is destroying our nation and in particularly California.
I did a little research and this is what i found - might be helpful for future emails you send out about this @JamesFenker.
"checked it against the actual Proposition 37 language, the Legislative Analyst, CalHFA’s financials, campaign-finance records, and the Terner research.
My assessment: the article has a legitimate core critique, but it pushes several defensible concerns beyond what the evidence actually establishes. I’d call it roughly 75% analysis / 25% polemic.
The factual backbone is remarkably solid. Prop 37 really does authorize CalHFA to issue up to $25 billion in revenue bonds, lend buyers as much as 17% of the purchase price as a second mortgage, require only 3% from the buyer, limit purchases to newly constructed homes or first sales of residential conversions, allow incomes up to 200% of local AMI, require only one year of California residency, and does not require first-time-homebuyer status. The home-price ceiling is 125% of the county conforming-loan limit—roughly $1 million–$1.5 million depending on location.
And the $411,000 Santa Clara number is essentially dead-on. Santa Clara County's 2026 AMI for a four-person household is $205,500, so 200% is $411,000.
Where I think the author has a very good point is the targeting question. This is not really an affordability program for struggling Californians. It is a financing program for people with sufficient income to qualify for a very substantial first mortgage but who lack—or would prefer not to deploy—a traditional down payment. Calling that "middle-class homeownership assistance" is politically useful language, but it encompasses households that are unquestionably affluent by national standards.
There is also a legitimate insider-benefit critique. The campaign has reported $19.7 million in supporting contributions, with major funding coming from the California Association of Realtors and related organizations, as well as carpenter unions. And there is an eyebrow-raising detail the article barely exploits: Prop 37 actually requires every participating buyer to retain a licensed California real-estate agent or broker. So the Realtors aren't merely philosophical supporters of homeownership; the statute itself guarantees agent participation in every subsidized transaction.
The construction-defect issue is also real. Terner found California condo production down roughly 90% from its mid-2000s peak, identifies defect liability as an important contributor, and found condo insurance can cost three to four times what insurance costs on comparable rental projects. Prop 37 gives developers choosing its "qualified builder" path additional right-to-repair protections, including the ability to obtain a release after satisfactory repairs. So asking, "Why not reform construction-defect law statewide rather than attach the reform to this program?" is a completely legitimate policy question.
But here is where the article starts overstating its case.
First, "$411K households are the beneficiaries" is rhetorically slippery. That's the maximum eligibility ceiling in Santa Clara, not the program's minimum or typical recipient income. A household making $180K or $250K could participate too. And AMI is deliberately geographic because $200K means something materially different in San Jose than in Fresno. You can still reasonably argue that 200% AMI is too generous, but "the households in line are rich" isn't analytically precise.
Second, the new-home-premium argument is cherry-picked. There absolutely are California coastal markets where new construction carries a big premium: recent Realtor.com data found about 35% in Los Angeles, 30% in San Francisco and 28% in San Diego. But San Jose was only about 6%, Riverside about 4%, and another 2025 analysis actually found California's statewide median new home cheaper than its existing-home median. So "Prop 37 forces people into homes that cost 19–40% more" is not a sound statewide statement.
Third, the union argument is directionally right but oversimplified. The qualified-builder path is voluntary, and all developers can build homes eligible for the buyer loan program. The special builder track does incorporate labor provisions, and some projects—especially buildings above 85 feet—face prevailing-wage and skilled-and-trained-workforce requirements that strongly intersect with apprenticeship systems. But those requirements are not simply "every Prop 37 house must use union labor." That's too broad.
The biggest weakness in the article, though, is the "$25 billion taxpayer bailout waiting to happen" argument.
CalHFA had about $4.98 billion in assets at June 2025, so yes: $25 billion is enormous relative to its present balance sheet. But $25 billion is an authorization ceiling, not $25 billion dumped onto CalHFA's books on Day One. CalHFA decides how much to issue and over what period.
More importantly, the bonds are not legally debts of the State of California. CalHFA's existing bonds are obligations of CalHFA, payable from pledged revenues and assets; the State is not liable for them. The Legislative Analyst therefore concludes Prop 37 has no direct state or local fiscal cost.
Could politicians someday decide to bail CalHFA out in a severe housing crash? Of course. Governments can choose to bail out almost anything. But that is a contingent political-risk argument, not an obligation created by Prop 37. The sentence:
“Voters are ... being asked to stand behind a $25 billion book of junior debt”
is therefore misleading. Bondholders and CalHFA stand behind that credit risk under the legislation—not California taxpayers. A future Legislature could change that politically, but Prop 37 does not.
The economics of subsidizing demand are the most interesting part. The author is right that giving buyers additional purchasing power in a supply-constrained market can capitalize into higher prices. That's Economics 101. But Prop 37 deliberately restricts that purchasing power to new construction, precisely because proponents hope predictable financed demand causes developers to build more supply. Whether the supply response dominates the price effect is unknown; even the LAO explicitly says the effect on construction and homebuying cannot presently be determined. So the author takes a plausible failure mode and writes it as a foregone conclusion.
And that brings me to what I think is the real question Prop 37 deserves to be judged on:
Why is California borrowing enormous amounts of private capital to make expensive housing easier to finance instead of making housing materially cheaper to produce?
That's a much stronger criticism than "this is secretly a $25B taxpayer bailout."
California has extraordinary land, permitting, regulatory, insurance, litigation and construction costs. Terner's work supports the proposition that those structural costs materially suppress housing production. Prop 37 tinkers with one of them—construction-defect liability—while primarily solving the buyer's financing problem.
So my read is:
The author has identified a real philosophical flaw: Prop 37 largely makes California's extraordinarily expensive housing system easier to finance rather than making the system substantially less expensive.
That does not automatically make Prop 37 bad policy. There is a coherent YES case: unlock households with income but inadequate down payments, concentrate assistance on new homes so public policy creates incremental demand for construction, use repayable loans rather than grants, protect taxpayers from direct liability, and perhaps stimulate condo production.
But if I were evaluating the measure from first principles, that is the tradeoff I'd interrogate—not the "Robin Hood in reverse" theatrics.
And one detail makes me considerably more suspicious of the design than I was before reading the actual legislation: requiring the subsidized buyer to hire a Realtor while the Realtor lobby is putting millions behind the measure is exactly the kind of provision I want a very good explanation for.
That is a much cleaner red flag than the article's speculative taxpayer-bailout argument."
I did some research, put what I found into ChatGPT, and used it to help articulate what I was trying to say. Perhaps instead of critiquing the method, you could opine on the substance of what was said. 🙂
This Prop 37 is typical of the many aberrational laws passed in CA. CA is an anti-consumer and pro creditor state. Only a change from R to D in the Legislature will help to reform the legal structure of CA.
There are literally thousands of DPA programs across America. They all operate basically the same way. The two features of this proposed DPA that are unusually flexible are (1) no income limit and (2) no requirement to be a first-time homebuyer. Without a robust housing market, many housing-dependent trades suffer: appraisers, carpenters/plumbers/painters, title and escrow companies, real estate sales, mortgage loan originators--the list is long. I'll wait for additional critiques of this program before I vote NO on Prop 37.
Don't wait...do some independent research and reach your own conclusion factoring in the realities of CA politics and the influence of the money behind unions and organizations who stand to financially benefit from such legislation...and who does not. Proactive...not reactive. FYI...I'm a broker and a builder...and will vote no.
I often use politicians support...or lack of...as a bellwether as to the veracity of an issue or proposition. If Newsom, Bona, Limon, Hart, Capps etc., support it...I run the other way...fast and far.
James - this is TMI (too-much information) - still not sure what it's all about and don't have time to dig thru it.
But your reference . . . "Prop 37’s construction-defect fix is designed to support union labor." is all I need to know. Anything that includes 'union labor' is automatically an overpriced scam.
Thank you James for taking the time to try and explain Prop 37: I get it now but at first glace I got it wrong as I am sure many will. Hoping that all the bills and props will be written about on Current before the election so that we may make an educated vote.
What always happens is that the state gets a windfall in tax revenue, this time do to AI start ups and public offerings, a lot of new millionaires pay big into the treasury, then the politician "assume" that this new revenue is the new basis for future budgets and then it is off to the races.
I would love CA to take a good look at its spending, support a rainy day fund, and give us tax payers a break from 13% tax rate.
To quote Mr. Fenkner... "Yeah, right. What could possibly go wrong?"
Does anyone remember good ol' Waters on the House Banking Committee when she accidentally stated "We Socialists" will make sure everyone has a house and an affordable loan.
Less than 2 years after her prophetic statement the entire US housing market crashed. With it, it took all of Canada, and Europe with it. It then rippled across the Pacific and hurt China and the Middle East.
If you don't get it you should. Socialism and Communism is the exact opposite of reality.
Ready for the author's final quote? "The official Voter Guide records that no argument against Prop 37 was even submitted. That silence is what a measure looks like when the people who would lose by its passage are not invited to a seat at Sacramento’s insider-only table."
The Democrats in Sacramento cannot even realize their own reality. They blame everyone else but themselves for failure.
So how about it Maxine? You don't live in your district. You made the on the record comment before the collapse caused by the Democrat Party and its failed Socialist policies.
Shhhh, Limon Pro-tem will not speak the truth. Greggy Hart runs from the truth.
Newsom who is supposed to lead the defunct party in Sacramento will not address the failure and collapse of the banking system and real estate because of the exact same policies.
Have You Had Enough Yet?
Thanks for this.
I agree with Mr. Fenkner’s analysis. Further, this article provides a perfect opportunity to discuss the laws of physics for economics, I. e. for every action there is an equal and opposite reaction. In other words, when the government passes a law to financially benefit a defined group, there will be an equal or greater cost imposed on others. In most cases the cost will be greater because of the inefficiencies created by the law. Also, the government will hide the cost by imposing it on a larger group of people over a long period of time. This is how politicians “buy” votes.
Whenever a politician claims to be providing a benefit to a group of people, you must ask who is and how is the cost being paid. Benefits cannot be created with no costs.
Berney
FRAUDafornia is at it again, messing with ballot measures, as a behind the BACK effort to drain money from the people of California!
The details of this bill sound like the return of a political favor or the one that demands the return of a political favor. No one would write this as-is without an agenda.
Upgrade? We are already killed by Fed and State income taxes and utility costs and taxes on our utilities, our property, sales taxes, taxes on our home gas, and water.
Taxes on our trash. Annual costs for our autos is a tax.
Basic decision making on all California ballot questions asking for more money - NO!
Bloody Hell! Deception, deception! It's all around us. Beware, beware, of all political propositions. Thanks, James for once, more warning us.
Just another huge payoff to the unions by the Democrats! This symbiotic relationship MUST end! I just can’t understand how people can’t see how this partnership they have is destroying our nation and in particularly California.
I did a little research and this is what i found - might be helpful for future emails you send out about this @JamesFenker.
"checked it against the actual Proposition 37 language, the Legislative Analyst, CalHFA’s financials, campaign-finance records, and the Terner research.
My assessment: the article has a legitimate core critique, but it pushes several defensible concerns beyond what the evidence actually establishes. I’d call it roughly 75% analysis / 25% polemic.
The factual backbone is remarkably solid. Prop 37 really does authorize CalHFA to issue up to $25 billion in revenue bonds, lend buyers as much as 17% of the purchase price as a second mortgage, require only 3% from the buyer, limit purchases to newly constructed homes or first sales of residential conversions, allow incomes up to 200% of local AMI, require only one year of California residency, and does not require first-time-homebuyer status. The home-price ceiling is 125% of the county conforming-loan limit—roughly $1 million–$1.5 million depending on location.
And the $411,000 Santa Clara number is essentially dead-on. Santa Clara County's 2026 AMI for a four-person household is $205,500, so 200% is $411,000.
Where I think the author has a very good point is the targeting question. This is not really an affordability program for struggling Californians. It is a financing program for people with sufficient income to qualify for a very substantial first mortgage but who lack—or would prefer not to deploy—a traditional down payment. Calling that "middle-class homeownership assistance" is politically useful language, but it encompasses households that are unquestionably affluent by national standards.
There is also a legitimate insider-benefit critique. The campaign has reported $19.7 million in supporting contributions, with major funding coming from the California Association of Realtors and related organizations, as well as carpenter unions. And there is an eyebrow-raising detail the article barely exploits: Prop 37 actually requires every participating buyer to retain a licensed California real-estate agent or broker. So the Realtors aren't merely philosophical supporters of homeownership; the statute itself guarantees agent participation in every subsidized transaction.
The construction-defect issue is also real. Terner found California condo production down roughly 90% from its mid-2000s peak, identifies defect liability as an important contributor, and found condo insurance can cost three to four times what insurance costs on comparable rental projects. Prop 37 gives developers choosing its "qualified builder" path additional right-to-repair protections, including the ability to obtain a release after satisfactory repairs. So asking, "Why not reform construction-defect law statewide rather than attach the reform to this program?" is a completely legitimate policy question.
But here is where the article starts overstating its case.
First, "$411K households are the beneficiaries" is rhetorically slippery. That's the maximum eligibility ceiling in Santa Clara, not the program's minimum or typical recipient income. A household making $180K or $250K could participate too. And AMI is deliberately geographic because $200K means something materially different in San Jose than in Fresno. You can still reasonably argue that 200% AMI is too generous, but "the households in line are rich" isn't analytically precise.
Second, the new-home-premium argument is cherry-picked. There absolutely are California coastal markets where new construction carries a big premium: recent Realtor.com data found about 35% in Los Angeles, 30% in San Francisco and 28% in San Diego. But San Jose was only about 6%, Riverside about 4%, and another 2025 analysis actually found California's statewide median new home cheaper than its existing-home median. So "Prop 37 forces people into homes that cost 19–40% more" is not a sound statewide statement.
Third, the union argument is directionally right but oversimplified. The qualified-builder path is voluntary, and all developers can build homes eligible for the buyer loan program. The special builder track does incorporate labor provisions, and some projects—especially buildings above 85 feet—face prevailing-wage and skilled-and-trained-workforce requirements that strongly intersect with apprenticeship systems. But those requirements are not simply "every Prop 37 house must use union labor." That's too broad.
The biggest weakness in the article, though, is the "$25 billion taxpayer bailout waiting to happen" argument.
CalHFA had about $4.98 billion in assets at June 2025, so yes: $25 billion is enormous relative to its present balance sheet. But $25 billion is an authorization ceiling, not $25 billion dumped onto CalHFA's books on Day One. CalHFA decides how much to issue and over what period.
More importantly, the bonds are not legally debts of the State of California. CalHFA's existing bonds are obligations of CalHFA, payable from pledged revenues and assets; the State is not liable for them. The Legislative Analyst therefore concludes Prop 37 has no direct state or local fiscal cost.
Could politicians someday decide to bail CalHFA out in a severe housing crash? Of course. Governments can choose to bail out almost anything. But that is a contingent political-risk argument, not an obligation created by Prop 37. The sentence:
“Voters are ... being asked to stand behind a $25 billion book of junior debt”
is therefore misleading. Bondholders and CalHFA stand behind that credit risk under the legislation—not California taxpayers. A future Legislature could change that politically, but Prop 37 does not.
The economics of subsidizing demand are the most interesting part. The author is right that giving buyers additional purchasing power in a supply-constrained market can capitalize into higher prices. That's Economics 101. But Prop 37 deliberately restricts that purchasing power to new construction, precisely because proponents hope predictable financed demand causes developers to build more supply. Whether the supply response dominates the price effect is unknown; even the LAO explicitly says the effect on construction and homebuying cannot presently be determined. So the author takes a plausible failure mode and writes it as a foregone conclusion.
And that brings me to what I think is the real question Prop 37 deserves to be judged on:
Why is California borrowing enormous amounts of private capital to make expensive housing easier to finance instead of making housing materially cheaper to produce?
That's a much stronger criticism than "this is secretly a $25B taxpayer bailout."
California has extraordinary land, permitting, regulatory, insurance, litigation and construction costs. Terner's work supports the proposition that those structural costs materially suppress housing production. Prop 37 tinkers with one of them—construction-defect liability—while primarily solving the buyer's financing problem.
So my read is:
The author has identified a real philosophical flaw: Prop 37 largely makes California's extraordinarily expensive housing system easier to finance rather than making the system substantially less expensive.
That does not automatically make Prop 37 bad policy. There is a coherent YES case: unlock households with income but inadequate down payments, concentrate assistance on new homes so public policy creates incremental demand for construction, use repayable loans rather than grants, protect taxpayers from direct liability, and perhaps stimulate condo production.
But if I were evaluating the measure from first principles, that is the tradeoff I'd interrogate—not the "Robin Hood in reverse" theatrics.
And one detail makes me considerably more suspicious of the design than I was before reading the actual legislation: requiring the subsidized buyer to hire a Realtor while the Realtor lobby is putting millions behind the measure is exactly the kind of provision I want a very good explanation for.
That is a much cleaner red flag than the article's speculative taxpayer-bailout argument."
Did you just put this into ChatGPT?? lol
I did some research, put what I found into ChatGPT, and used it to help articulate what I was trying to say. Perhaps instead of critiquing the method, you could opine on the substance of what was said. 🙂
This Prop 37 is typical of the many aberrational laws passed in CA. CA is an anti-consumer and pro creditor state. Only a change from R to D in the Legislature will help to reform the legal structure of CA.
Just like Prop 38, look at who wrote it and who benefits?
Everything else is marketing
There are literally thousands of DPA programs across America. They all operate basically the same way. The two features of this proposed DPA that are unusually flexible are (1) no income limit and (2) no requirement to be a first-time homebuyer. Without a robust housing market, many housing-dependent trades suffer: appraisers, carpenters/plumbers/painters, title and escrow companies, real estate sales, mortgage loan originators--the list is long. I'll wait for additional critiques of this program before I vote NO on Prop 37.
Don't wait...do some independent research and reach your own conclusion factoring in the realities of CA politics and the influence of the money behind unions and organizations who stand to financially benefit from such legislation...and who does not. Proactive...not reactive. FYI...I'm a broker and a builder...and will vote no.
I often use politicians support...or lack of...as a bellwether as to the veracity of an issue or proposition. If Newsom, Bona, Limon, Hart, Capps etc., support it...I run the other way...fast and far.
James - this is TMI (too-much information) - still not sure what it's all about and don't have time to dig thru it.
But your reference . . . "Prop 37’s construction-defect fix is designed to support union labor." is all I need to know. Anything that includes 'union labor' is automatically an overpriced scam.
Thank you James for taking the time to try and explain Prop 37: I get it now but at first glace I got it wrong as I am sure many will. Hoping that all the bills and props will be written about on Current before the election so that we may make an educated vote.
What always happens is that the state gets a windfall in tax revenue, this time do to AI start ups and public offerings, a lot of new millionaires pay big into the treasury, then the politician "assume" that this new revenue is the new basis for future budgets and then it is off to the races.
I would love CA to take a good look at its spending, support a rainy day fund, and give us tax payers a break from 13% tax rate.
Daniel: SBCurrent does plan to examine every Proposition on the upcoming November ballot!
It's a bond measure. That's all I need to know in order to vote against it.
Rule of thumb: Any proposition that floats bonds is a hard no.