City Moves to Close Housing Affordability Gap

Scott Lucas | March 17, 2014 | Story Politics

Just what constitutes affordable housing? It's a question that, as the Chronicle pointed out, elicits a wide range of answers. A recent poll of San Francisco voters by the Committee on Jobs found the same thing—definitions ranged from "a basic two-bedroom home without the frills" to "a one bedroom/one bath should be $1,000, not $4,000." Whatever the answer is, San Franciscans know what unaffordable housing is: which is what 42 percent rated their own places.

So it's little surprise that mayor Lee has focused on housing affordability (anybody who wants to win election has to in this political climate.) His new proposal is to increase the funding for a city program that provides homeowner loans.

The city will now be lending up to $200,000 to first-time buyers to help them remain in San Francisco. The program, run by the Mayor's Office of Housing, offers the loans to buyers whose households make up to 120 percent of the area's median income—which is currently $116,500 for a family of four.

(Why the 120 percent cut off? That's the general threshold at which someone in San Francisco qualifies for the affordable housing set asides that the city requires from new market-rate developers.)

When buyers sell their homes or refinance, they repay the loan, along with a percent of the property's appreciation, back to the fund, which then can re-use the money to fund another homeowner. The mayor also announced he would be proposing an increase in the city's contribution to the fund from one million dollars in the previous fiscal year to $15 milllion over the next five.

Since 1998, more than 570 households have benefited from the program, for which the city has made almost $15 million in total loans.

So is this expansion a silver bullet? Or, like tightening Ellis Act eviction protections, is it a way to chip away a small-fraction of the overall housing market problems only at the margins? Time will tell.

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