Guest Commentary: More Starter Homes for Purchase

Photo by Tierra Mallorca on Unsplash

by Ellen Kolarik

The Housing Trust Fund (HTF) addendum in our Housing Element clearly lays out that our HTF must fund programs for 3 broad groups: The Unhoused (including emergency shelters, transitional housing and permanent supportive housing), Renters and Buyers looking for an affordable home.

Why is this important?  This is the first of 3 letters outlining why we should support housing in each of these areas beginning with for-purchase affordable homes.

There is a myriad of reasons for needing more affordable for-purchase homes in Davis.

First and foremost, state law demands it.  Our state defines a goal of housing units in its Regional Needs Housing Allocation (RNHA) for every city and county in California.  Like many cities, Davis is coming up short.  For the housing cycle of 2023-2031, Davis needs 830 units of moderate income housing to comply with the state.  If we can’t build these homes for either rent or purchase on our own, the state will apply penalties which can include significant financial consequences (legal suits, attorney fees, and state leveled fines), loss of permitting authority, and utilization of the “Builder’s Remedy” in which developers can seek streamlined approval of applications if they can prove their project will help their jurisdiction reach RHNA compliance.

But this is not just about meeting a quota.  Our lack of moderate-income housing for purchase impacts our residents personally, socially and environmentally.    Our adult children, even those making a starter professional salary, can’t afford to buy into their hometown.  Our majority white community sustains its lack of diversity by locking out lower income people (of which a higher percentage are minorities) creating both economic and racial segregation.  And finally, a lack of affordable for purchase housing that is near jobs and public transportation to jobs is one more factor fueling climate change.    Many of our blue color workers and young professionals commute from out of town increasing their carbon footprint.  Simply allowing workers to live in the town in which they work, reduces carbon emissions.

So how can we help low- and moderate-income individuals to buy in?

First, we must encourage our developers to focus on the production of starter homes: single family homes with small square footage or even better, homes which are less expensive by design (e.g. town homes, duplexes and quadplexes).

Then we need to help first time home buyers buy that home.  By funding the HTF with ongoing and significant revenue, our city would have the revenue to approve new programs, such as this example Down Payment Assistance (DPA) program designed specifically for Davis that was presented to the Social Services Commission March 28 2022.  The full plan can be found on the City of Davis website, under the Social Service Commission agenda for that same date.

In this DPA plan, the HTF would supply up to 10% of the purchase price or a maximum of $20,000 per prospective or defined first-time home buyer.  The recipient would pay 3% simple interest with a 30-year deferred payment.  Funds repaid would be returned to the HTF.  Repayment of principal and interest or equity share would be due upon the sale of the property, payoff or refinance of the 1st mortgage.  Unfortunately, while the Social Services Commission recommended that the city staff present the information to the city council, the council has not yet addressed it.

What can you do to help diversify our community, provide housing opportunities for our workforce and fight climate change?

Tell the Davis City council that you support expanding the supply of for-purchase affordable homes.  Urge them to press our developers to radically increase the number of starter homes in their planned developments.   Let the council know you support funding the housing trust fund with significant and stable funding from the general tax revenue measure we anticipate the city will propose for the November 2024 ballot.  Let them know that you support your tax dollars being used for programs like a city-wide Down Payment Assistance program.    And finally, vote YES on the 2024 revenue measure.

Ellen Kolarik, Co-Chair Interfaith Housing Justice Davis

About The Author

Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

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  1. Richard McCann

    I think this could be a good approach. Perhaps an important element could be to make the fund a revolving fund so that it eventually becomes self financing. Including these requirements in a universal set of baseline features could be part of a proposal to replace Measure J/R/D.

  2. David Thompson

    Dear Ellen,

    About 200 Davis homes have already been done as below market prices starter homes. Those 200 homes all dissappeared forever after the first sale.  The record of those 200 homes is for the most part scandalous.  Due to the about $30 million in personal ill -gotten gain gathereed by the lucky few ,the city (even a city staff member got one of the houses) had to finally step in and put an end to the program. We have as a result a program that works in perpetuity that ended the one off abuse.

    Are you suggesting that the city revive a bonanza laden program of personal gain?

    Within the city and UCD we have four programs that provide entry level home ownership that have worked well for at least 30 years and loom to work well and even more effectively each year in perpetuity.

    Rather than back a get rich quick scheme for one household one time why did you not choose to include those four successful and ongoing methods  that have served and will continue to serve hundreds of Davis families.

    I will not support a city wide vote that maximises personal gain for a few at the expense of those that will never be able to buy those homes once they are first sold. Unless there are guarantees that the fund will expend most of its funds on low and very low income non profit housing I will have to oppose it.

    I’d be happy to meet with your group to go over the about 200 individual abuses for personal gain of the previous for sale program.

    I’d be also happy to share with you the success of the four programs we have that do work and hope you will choose a different path.

    Keep in mind as soon as that for sale home goes to market, the less likely it can be bought by a racial minority or low income household. In the four programs, the homes are always available to the low to moderate income group which have a higher % of racial minorities.

    In due course I offer the the Vanguard to do an opinion piece that provides extensive proof of the many abuses.

    I may be incorrect in my critique but if the for sale home you propose goes to market price after the first sale then my critique stands.
    David J Thompson, my own opinions and not representative of Neighborhood Partners, LLC or Twin Pines Cooperative Foundation.

  3. Tim Keller

    I agree with both the premise and David’s crituque.

    The “lowest rung on the property ladder” in Davis shouldnt be a million dollar home.

    At the same time, producing that affordability through financing gimmics that only apply to the first purchasers of those homes is also not that much of a help.

    We need for-sale affordable options that are more affordable for normal, market-based reasons:

    1) Supply and demand – there is enough housing stock that we don’t have rampant competition driving prices up

    2) Affordability by type – Attached housing which is less expensive to build / maintain etc in the first place

    3) Affordability by business model:  Co-Ops give a path to earning equity in ways that would not be available to people currently renting

    We need to be doing all of these I think.


  4. Ellen Kolarik

    Dear David,
    Thank you for your response to my submission.  I know that you have a passion for providing housing which is affordable, and that it is a very complex issue.
     I recognize that any Down Payment Assistance Program the city approves will need to be developed carefully. And it is intended to be a loan program so that once the funds are invested in the program by the City, the funds then can “revolve” as suggested by Mr.  McCann.  
    However, a down Payment Assistance Program is only one small part of a potential solution to our housing shortage.  Davis, like cities throughout California and indeed the entire country, are facing serious housing shortages. My hope is that the housing activists in Davis can come together to find the common ground to address the housing needs we face.


    Ellen Kolarik

  5. Georgina Valencia

    I am responding to David Thompson’s commentary.  First, let me state that I am very disappointed in Mr. Thompson.   While Down Payment Assistance may not be to Mr. Thompson’s personal liking.  These programs have proven track records and do make a difference in peoples lives.

    The most recent example I will share with the readers is the California Dream for ALL Program.  This was a program with an initial $300 million budget that in March of this year funded 2,000 plus first time homebuyers in 11 days.   The program was such a success that Governor Newsom just allocated another $200 million to be released soon.

    The beauty of this program is that the State receives back a profit in the form of money loaned at an approximate 5% interest rate, and the state also receives a portion of the equity gained when the homebuyer sells their home.  This is a program that pays for itself in much the same way that the program Ellen Kolarik is referencing in her letter does.

    Let me finish my comments by stating that I had 2 first time homebuyers that qualified for and utilized the Dream For All Program.   The ability for both of these clients to buy a home became real because of the program.  Neither had family members that could gift a down payment.  One of the buyers was working (2) jobs to save for a down payment.   This program has changed their lives and I don’t see this as a “get rich quick scheme”as Mr. Thompson states.   Their story is much like the story of so many young people trying to live in Davis and buy a home here.


    Georgina Valencia



  6. Matt Williams

    Georgina, I do not believe you understand David Thompson’s objection. What he is objecting to is not the program, but rather what happens at the time of the second sale of the residence.

    For example, imagine a hypothetical $500,000 purchase For which the first time buyer receives a $50,000 down payment assistance. That means the buyers outlay is only $450,000 for the house.

    now we get to the time of the resale of that house for a hypothetical $600,000. The 10% down payment assistance should stay with the residence not be liquidated and paid to the first time buyer. If the down payment assistance stays with the residence the $600,000 sale would be reduced by $60,000 and the first time buyer now a seller would walk away with $540,000 as the return on the initial their initial $450,000 investment.  That is a $90,000 capital gain.

    The way the program has been described the first-time buyer would walk away from the resale transaction with the full $600,000 sale price and their capital gain would be $160,000.  The question David is asking is why should that first-time buyer put the $50,000 in their pocket. Shouldn’t that $60,000 become first-time buyer down payment assistance for the second buyer of the residence?

    If the $50,000 is given to the initial buyer as a windfall payment then the community sees its inventory of affordable residences depleted rather than preserved.  Is that a good outcome?  David doesn’t think so, and I agree with him.

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