When Representative Eric Swalwell announced his candidacy for California Governor during a late-night television appearance, few real estate professionals immediately connected the dots to their industry. However, in a state where housing costs consume nearly half of many residents’ incomes, political leadership directly influences mortgage rates, affordability, and market stability. Swalwell’s campaign platform, which emphasizes making California “a state where you can take your first job, have your first kid and buy your first home in the same decade,” signals potential policy shifts that could ripple through California’s $4 trillion economy and impact every homeowner and prospective buyer from San Diego to Sacramento. The timing of his entry couldn’t be more critical as mortgage rates remain volatile and inventory constraints continue to challenge market equilibrium.
California’s housing affordability crisis stands as one of the most significant barriers to economic mobility in the nation, with median home prices consistently hovering around $800,000 statewide and mortgage rates climbing to levels not seen since 2002. Swalwell’s rhetoric about building “a new California” suggests he recognizes this challenge, but his focus on national political battles rather than local housing issues raises questions about his understanding of the state’s unique real estate dynamics. Current mortgage rates have increased by over 2 percentage points in the past year alone, adding approximately $500 to monthly payments on a median-priced California home, pushing many potential buyers out of the market and increasing demand for rental properties in an already tight rental market.
The relationship between political leadership and mortgage rates remains poorly understood by most consumers, yet governors play a crucial role in shaping the housing market through policy decisions that influence everything from environmental regulations to infrastructure investment. Swalwell’s emphasis on “keeping the worst president out of our homes” suggests a confrontational approach to federal relations, which could indirectly impact California’s ability to secure federal housing grants and mortgage assistance programs. With California housing agencies depending on billions in federal funding annually for affordable housing initiatives and disaster recovery, political friction at the federal level could translate directly into higher mortgage costs and reduced homeownership opportunities for middle-class families across the state.
Historical data reveals a clear pattern: states with more business-friendly regulatory environments typically experience lower mortgage rates and increased housing construction. California’s notoriously slow approval processes, with median timelines of 3-5 years for new housing developments, have created artificial scarcity that drives prices higher. Swalwell’s campaign promises of “building a new California” must address these fundamental supply-side constraints if meaningful progress is to be made. Industry experts note that simply maintaining current demand levels would require California to permit and build over 200,000 new housing units annually—a figure the state has achieved only briefly during its most aggressive growth periods.
Mortgage professionals are watching Swalwell’s candidacy closely, particularly given his controversial history that includes a Department of Justice referral for potential mortgage and tax fraud allegations. While these personal matters may seem unrelated to housing policy, they raise questions about judgment and regulatory philosophy that could directly impact California’s housing finance agencies. The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has increasingly emphasized risk management and regulatory compliance in recent years—approaches that could either tighten or loosen credit availability depending on political leadership. For homeowners, this translates to potential changes in mortgage qualification standards, refinancing opportunities, and access to government-backed loan programs.
California’s position as the world’s fourth-largest economy creates unique advantages and challenges for its housing market. With a GDP exceeding $3.5 trillion, California’s economic decisions influence national and global financial markets, including mortgage-backed securities that determine interest rates nationwide. Swalwell’s campaign rhetoric about standing up to federal overreach could position California as a continued leader in progressive housing policies, but may also create regulatory uncertainty that increases risk premiums in mortgage lending. Housing economists note that California’s housing market often serves as a bellwether for national trends, with innovations in sustainable housing,Accessory Dwelling Units (ADUs), and mixed-use developments frequently spreading to other states after proving successful in California’s innovative regulatory environment.
The regional disparities within California’s housing market are dramatic, with coastal metropolitan areas experiencing price-to-income ratios exceeding 10:1 while inland communities remain relatively affordable. Swalwell’s campaign will need to address these disparities if he hopes to deliver on his promise of making California “a state where you can take your first job, have your first kid and buy your first home in the same decade.” Current mortgage rate differentials between premium and conforming loans have widened significantly in recent months, meaning that borrowers in high-cost areas like San Francisco and Los Angeles may face interest rates up to 0.5 percentage points higher than those in more affordable regions of the state, exacerbating regional inequality in homeownership opportunities.
Environmental regulations have increasingly become intertwined with housing policy in California, with stricter building codes and climate resilience requirements adding 15-25% to construction costs in many areas. Swalwell’s background on the Intelligence Committee suggests awareness of climate security issues, but his specific positions on balancing environmental protection with housing affordability remain unclear. The mortgage industry has adapted to these regulatory challenges through green mortgage programs that offer interest rate discounts for energy-efficient homes, but implementation has been inconsistent across the state. Homebuyers should be prepared for continued regulatory complexity that may increase both upfront costs and long-term maintenance expenses, factors that mortgage underwriters increasingly incorporate into their risk assessments and loan qualification decisions.
California’s rental housing market faces its own set of challenges, with vacancy rates hovering below 3% in many urban areas and rents increasing by double-digit percentages annually. Swalwell’s focus on “filling homes with food and flood them with light” suggests an awareness of the quality-of-life issues affecting California residents, but comprehensive rental policy remains less discussed than homeownership issues. For mortgage professionals, this creates interesting cross-market dynamics, as rising rents make homeownership relatively more attractive even as affordability challenges persist. The California Apartment Association estimates that the state needs to build 180,000 new rental units annually to meet current demand, a figure that seems increasingly unrealistic given current construction costs and labor shortages, factors that directly impact both rental rates and mortgage lending risk assessments.
Technology and innovation represent California’s greatest opportunity to address its housing crisis, but implementation has been fragmented across jurisdictions. Swalwell’s campaign could benefit from proposing statewide standards for modular construction, streamlined permitting processes, and digital documentation systems that could reduce construction timelines by 30-50%. The mortgage industry has begun adapting to these innovations through automated valuation models and digital mortgage platforms that reduce processing times from weeks to days, but regulatory fragmentation across California’s 58 counties creates compliance challenges that slow adoption. Homebuyers should consider communities with progressive technology adoption when evaluating purchase decisions, as these areas may offer faster processing times and potentially better loan terms in an increasingly competitive lending environment.
The timing of Swalwell’s candidacy occurs at a critical juncture for California housing policy, with several key legislative provisions affecting mortgage interest deductions, housing finance agencies, and disaster resilience programs set to expire in the coming years. Political leadership will determine whether these provisions are renewed, modified, or allowed to sunset—decisions that could significantly impact housing costs across the state. Mortgage rate projections suggest continued volatility through 2024, with potential relief contingent on Federal Reserve policy decisions and inflation trends. California’s unique position as both a high-cost state and an economic leader creates additional complexity, as any policy changes implemented here often serve as models for other states, creating a multiplier effect that extends beyond California’s borders to influence national mortgage markets and lending standards.
For prospective homebuyers and current homeowners in California, the upcoming gubernatorial election presents both risks and opportunities. Regardless of Swalwell’s ultimate success, the discussions surrounding his candidacy highlight fundamental questions about California’s housing future that will impact mortgage markets for years to come. Practical advice includes maintaining strong credit scores in anticipation of potential regulatory changes, exploring alternative loan products such as FHA or VA loans that may offer more favorable terms in shifting political environments, and carefully evaluating the long-term affordability of properties considering potential rate increases. Real estate professionals should prepare their clients for increased scrutiny of mortgage applications as regulatory environments evolve, with particular attention to documentation requirements and debt-to-income ratios that may become more conservative under future political leadership, regardless of which party ultimately controls the governor’s mansion.
