California Passes Down Payment Assistance Plan, but Push To Cut Red Tape Remains in Limbo

California voters headed to the polls on Tuesday to decide three new housing-related ballot measures. While two of them handily passed, votes are still being counted on a plan to cut red tape and streamline environmental reviews for new homes.

Voters approved Proposition 1, which authorizes California to issue $11.25 billion in bonds to support housing affordability programs, including multifamily rental housing, permanent supportive housing, and affordable housing. The funding also backs both down payment assistance programs and mortgage programs for veterans.

Gov. Gavin Newsom expressed support for the measure, as did the Democratic Party of California. The ACLU, the California Apartment Association, and the California Housing Consortium also supported the measure, although there was some scattered opposition from Republican state legislators.

"This bond is about building communities, expanding access and affordability in California, where every family has a fair shot at a place to call home," Newsom said in a June statement.

Voters backed a similar measure in 2024 that earmarked $6.38 billion for homelessness and veterans housing programs.

"Higher mortgage rates have squeezed homebuyers and the for-sale market for four years, and they have hurt builders, too, especially in multifamily," Realtor.com senior economist Joel Berner says.

"Apartment projects depend on layers of financing, and assembling it has gotten much harder at today’s borrowing costs, particularly in a state as expensive and complicated to build in as California. When rates jumped in 2022 and 2023, a backlog of [COVID-19] pandemic-era projects that were already financed kept delivering homes. That backlog has been worked through, and the multifamily pipeline behind it is much thinner today," Berner adds.

Berner calls Prop 1 a "modest attempt to plug this gap" but only "one piece of the puzzle," noting that the infusion of cash won't do much to reduce approval times or land acquisition costs.

Proposition 37

Californians also approved Proposition 37, which creates a $25 billion loan program for middle-income earners to purchase new homes. The state would issue bonds and use the proceeds to offer fixed-rate mortgages for up to 17% of the purchase price of newly constructed homes priced below $1.5 million

Borrowers must be California residents who pay at least 3% down and meet some income requirements. This, supporters say, would help lower the amount they'd need to save for a down payment on a new home. They expect the measure to spur the construction of new homes and be paid for when investors and home borrowers repay the loans.

The California Association of Realtors and the California Chamber of Commerce both supported the measure.

"Voters in California have seized the opportunity to help alleviate the burden of current mortgage rates on new-home buyers," says Berner of the initiative's passage. "With current mortgage rates holding above 7%, this presents the opportunity for buyers to save on interest payments for part of their home purchase, which could be a boon to the new-home segment of sales in the Golden State."

But, says Berner, housing is still above $1.5 million in many California metros, signaling that the measure's impact may be circumscribed.

"The median listing price for newly built single-family homes in the San Jose metro is over $2.1 million. In Los Angeles, it’s over $1.7 million. San Francisco has a median of about $1.5 million, and San Diego’s median is about $1.3 million. Among newly built single-family homes for sale in 2026 in the San Jose metro, just 41.7% were priced below $1.5 million. In Los Angeles, the share was 41.7% as well; 49.5% of newly built single-family homes in San Francisco were below the threshold; and in San Diego, 61.4% were. Proposition 37 has the potential to help prospective California homebuyers, but only if they can find new homes to buy."

Proposition 45

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

Votes for the measure are still being counted. With 65% of the votes counted on Friday, 54.9% of Californians have voted against it while 45.1% voted in favor.

Affordable housing advocates—including the Associated General Contractors of California, the California Building Industry Association, the California Council for Affordable Housing, and the California Chamber of Commerce—expressed support for the measure.

Environmental groups and labor unions widely opposed it, arguing that it would reduce environmental oversight and community decision making around new development.