June 27, 2008

Soma Grand (1160 Mission) BMR Applications Are Now Available

Applications are now available for the 29 Below Market Rate (BMR) condos at Soma Grand. Seventeen one-bedrooms ($217,868 - $221,698), eleven two-bedrooms ($240,266 - $246,664), and one three-bedroom ($275,739). All prices exclude parking (spaces available for an additional $45,000).

These are “100% of 2007 HUD Unadjusted Area Median Income” units, so household incomes can not exceed $60,550 for one person, $69,200 for two, and $77,850 for three. Applicants must be first-time homebuyers and applications are due Friday, July 25, 2008 by 5:00 p.m.

Available Affordable Homeownership Units: June 27, 2008 [SFGov]

First Published: June 27, 2008 1:00 PM

Comments from "Plugged In" Readers

There's an automatic voting block for you when it comes to HOA issues....

Posted by: Dede at June 27, 2008 1:28 PM

Are BMRs worth it? I barely squeeze in under the limit for this. I know there is a restriction on resale, but is there anything else to look out for? Is the HOA statement above true?

Posted by: Renter at June 27, 2008 1:37 PM

If you want to stay in San Francisco and don't expect to be able to afford a traditional market rate residence at any time in the future, and through the BMR program you can afford a nicer place than you can rent, then a BMR is worth your consideration. You get all the benefits (and headaches) of homeownership although future appreciation is limited.

I believe the comment above regarding HOA's refers to the fact that a certain percentage of the building (currently 15%) will be filled by BMR residents with lower incomes and therefore more likely to resist additional HOA increases.

Posted by: Enthano at June 27, 2008 1:46 PM

At least these are available to individuals who earn the area median income - statistically average wage earners. That, to my mind, should be the true significance of "affordable" housing -not a pretty euphemism applied to low-income housing developments. Truth is best, after all.

Posted by: zzzzzz at June 27, 2008 1:47 PM

Just how are these affordable again?
Take a 1 BR for 265k w/20% down your mortgage is still 1300 per month, high HOA fees of 500 per month (600 if you want a parking space)and you are at 1800-1900 per month without even factoring in taxes, insurances, utilities.
Now these are limited to people making under 60k a year....how is this financially feasable for that income bracket?

Posted by: jd at June 27, 2008 1:55 PM

I think that tax deductions plus the eventual increase in the owner's income are what make the BMR program feasible. Of course the first year or two will be rough.

Posted by: Renter at June 27, 2008 2:41 PM

JD, as your rough calcs show, total annual housing expenses are a bit above 20k or about 1/3 of a roughly 60k annual salary. 33% is the standard measure used to determine what you can afford for housing. Once you figure in things like the tax deduction the affordability of these units are apparent.

Posted by: Enthano at June 27, 2008 3:12 PM

JD's thinking exactly what I'm thinking. Let's take a look at the math shall we?

Income: $60,500 (25% Federal Tax Bracket as of 2008 and 9.3% CA State Tax)

Monthly take-home: ~$3,362.79

1 bedroom BMR value: $217,868
20% down:
30 year fixed @ 7%
Monthly payment: $1,159.59
HOA: $550/month (On the low end)
Total monthly payment: $1,659.59 (not including taxes)

% of income spent on mortgage & HOA alone: ~49.35%

Clearly someone in the Mayor's Office of Housing needs to revisit the income limits and raise them to more 'realistic' limits.

Besides, weren't BMRs originally targeting our public service employees to help keep more of them here in the city? If that's the case, then they need to really raise these income limits if the starting salary of an SF policeman is ~$70,733/year:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/06/27/BAGRDQMJVS1.DTL

Posted by: thefatkid at June 27, 2008 3:25 PM

Sorry...skipped the "20% down = $43,573.60." Leaving an outstanding loan amount of $174,294.40...

Posted by: thefatkid at June 27, 2008 3:55 PM

Your are calculating taxes wrong.

The marginal rate is 25%, not the taxes on your total pay. The same assessment applies to state taxes. Also, you forgot payroll taxes.

Here are my calculations:

Income: $60,500
Mortgage Interest Tax deduction: 12114
Property Tax deduction: 2505
Taxable income: 45881

Federal taxes: 7814
State taxes: 2074
Property tax: 2505
Payroll tax: 4628 (7.65% of 60,500)

HOA: 6000

This leaves 22860 or 1905 a month to live off, which seems like enough to me. Not plenty, but enough.

I used tax tables (Google for them) and the amortization table at:

http://ray.met.fsu.edu/cgi-bin/amortize

Posted by: NoeValleyJim at June 27, 2008 3:59 PM

Anyone knows when is the move in date for Soma Grand?

Also how do we find out which are the BMR units available.

Posted by: emptynester at June 27, 2008 4:01 PM

Ethano, my numbers were far from total annual housing costs, they didn't include ANY taxes, or ANY insurance costs...the only figures I gave were for basic mortgage and HOA, and the numbers are well above 33% of the TOP salary allowed under the guidelines. The only way this would work is if the buyer has a HUGE downpayment, otherwise monthly payments combined with utilities, taxes and insurances would leave them nothing left for food. Forget about saving for retirement...and considering these units have major resale restrictions, it isn't like this would be a profitable investment for the buyer.

Posted by: jd at June 27, 2008 4:04 PM

NoeValleyJim, Your calculations don't include the monthly mortgage payment....you have the tax deductions but not the outlay.

Posted by: jd at June 27, 2008 4:09 PM

We should do away with all BMR housing. It is discrimination.

Posted by: Spencer at June 27, 2008 4:24 PM

Well, I wouldn't call it discrimination, but it's clearly a form of wealth redistribution (BMR buyers subsidized by the buyers of market-rate units and developers). On that score, yes, it gets harder to defend.

Posted by: zzzzzzz at June 27, 2008 4:33 PM

what are the resale restrictions? and what is the appreciation limitation? also what happens when your income increases past the maximum allowed (after you already bought the unit)? Also is there any stigma buying BMRs?

Posted by: futurebuyer at June 27, 2008 4:45 PM

I'd be curious about the answer to the opposite question. Is there a limit on depreciation and what happens if the owners lose their jobs? Anyone know? Does the government limit downside? If so, how much? If not, who is then gonna ask for a bailout? Who's gonna claim discrimination then?

Posted by: resp at June 27, 2008 4:57 PM

what are the resale restrictions? and what is the appreciation limitation? also what happens when your income increases past the maximum allowed (after you already bought the unit)? Also is there any stigma buying BMRs

Great question? Does anyone know??

Posted by: ej at June 27, 2008 5:13 PM

The HOA dues are what those living on the edge of qualification have to worry about. I asked my supervisor, Ross Mirkarimi, if The City was able to regulate HOA payments for BMR set-aside units. He had his staff research and came back with:

"As I promised, here is what I learned about HOA dues.

They are regulated by the state with no option for local regulation. Also, HOAs are not pro-rated for affordable or inclusionary units and are thus somewhat an anathema to using condos to provide affordable housing.

A change in state law would be required for a local jurisdiction to regulate the HOAs, similarly the state could simply change to law to allow pro-ration for affordable units or some other device to ameliorate the fees which can be up to $1200 per month . One remedy is to have Assembly member Leno carry legislation allowing developer to market/ pre-sell condos prior
to construction thereby leading to more rampant speculation in the market."

Carol Lloyd covered this issue here and here.

Posted by: Eric in SF at June 27, 2008 5:43 PM

people who are claiming it is unaffordable to people making 60k/year are flat out wrong. i was making 60k/year with a 180k mortgage a few years ago and it's definitely doable.

Posted by: yao at June 27, 2008 7:13 PM

I'm curious about the demographics of those who purchased BMR units in SF -- who are they? minorities? what are their occupations, ie. teachers, middle class families, public service workers who complain that the city is unaffordable?

The only value to the above BMR units I see are the three bedrooms units.

Posted by: Live Smart at June 27, 2008 7:59 PM

I certainly wish I could take advantage of this deal. I don't live in SF, but would like to. I make a very good salary for the San Joaquin Valley, yet I notice I could not qualify for these places because my salary is too high, something I would not have thought possible for SF.

Posted by: dkzody at June 27, 2008 8:11 PM

I thought the 33% rule was based on gross earnings, not take-home.

Posted by: crash at June 27, 2008 8:31 PM

dkzody the website says preference is given to san francisco residents but others may also apply.

I think the way to do this is buy one early in your career and then as your salary increases you have a nice, affordable place. If you aren't able to anticipate salary increases, not such a great deal. Then again, living in San Francisco isn't cheap if you're renting, either.

It's a better deal for a couple.

I did read in the chron about a lady who lost her bmr because of increases in hoa that she could not afford.

Posted by: dissent at June 27, 2008 8:37 PM

"...I asked my supervisor, Ross Mirkarimi, if The City was able to regulate HOA payments for BMR set-aside units. He had his staff research and came back with:

"As I promised, here is what I learned about HOA dues.

They are regulated by the state with no option for local regulation. Also, HOAs are not pro-rated for affordable or inclusionary units and are thus somewhat an anathema to using condos to provide affordable housing."
--------------------

SOOOOOOOO,.... if condos are not a good vehicle to provide affordable housing - why require developers to build them?!!!!! All this does is raise the price of and limit the production of market rate condos!!!! Why does Mirkarimi support BMR condos if this indeed an accurate quote?

Posted by: Dede at June 27, 2008 8:42 PM

Thanks jd, you are of course correct. I included the Interest and Taxes in my PITI, but not the "P".

It is quite small in the beginning, about $150/mo.

That leaves you with 1655. I also left out insurance, which can't be more than $50/mo or so.

Still left with $1600/mo to live off of. This is enough for a single person, though it is kind of amazing how much you have to make to just get by here.

Posted by: NoeValleyJim at June 27, 2008 8:54 PM

What a buyer is willing to pay and what a lender considers the buyer capable of paying are not the same. For conventional-loan qualification purposes, take the PITI for the least-expensive 1-bedroom (80% LTV, 6.25% 30-year-fixed, $25/mo. ins.) and your hypothetical $60,500/yr. buyer has a debt/income ratio of about 25% -- OK, but throw in common charges, d/e goes up to about 35%, which is a problem. Unless the city wants to encourage the use of nonconventional mortgages to purchase "affordable" housing, perhaps the income limits should be revised.

Posted by: Animo at June 28, 2008 8:07 AM

"Carol Lloyd covered this issue here and here."

Carol Lloyd is not a credible reporter. Her Articles are full of factual errors and she's been bumped out of the Real Estate Section of the Chronicle.

M.R.

Posted by: Mystery Realtor at June 28, 2008 8:38 AM

Get rid of BMR. It's a rediculous policy.

You want to make SF more affordable, build more domiciles. This can easily be done by giving landowners their property rights.

If you build 1,000,000 more units in the city you will surely see property prices decrease. Supply and demand. we're already seeing this to some degree with the prices of non-luxury condos in SoMa as well as the far outskirts of the Bay Area where there was a lot of building.

the problem: many of the current homeowners hate this because it causes Property values to fall. And they want to sell for a profit at some time in the future. So when you actually build units people scream "overbuilding" and then come up with subsidies to keep prices high.

so prices will always be relatively high in SF. NIMBYism at its finest.

Posted by: ex SF-er at June 29, 2008 9:05 AM

You can take the boy out of the projects, but you can't take the projects out of him.

http://www.theatlantic.com/doc/200807/memphis-crime

Posted by: Bingo Lover at June 29, 2008 9:39 AM

what is the relevance of your article Bingo Lover?
nobody is proposing moving impoverished people into nice neighborhoods. Or are you equating the median income-earner of San Francisco to a person from the Memphis ghetto?

heaven forbid that the median income earner spread his/her "lifestyle" to San Francisco.

and as I already said, I'm 100% against BMR.

Posted by: ex SF-er at June 29, 2008 11:48 AM

I own a business. Is it possible for me to game the system by lowering my income for a year to below the median level, buying a BMR unit and then a year later, pay myself back all the money I "didn't" earn?

That would be a nice way to get into the market for half the going price ...

Posted by: Jimmy (Bitter Renter) at June 29, 2008 3:06 PM

If you really understand the history behind BMRs, it was exactly that -- the concept of putting impoverished people among successful ones.

That's why the median level income is so low for BMRs. They were designed for the poor, not the middle class, which about sums up everything on why the middle class has fled San Francisco. They ain't coming back.

Posted by: Bingo Lover at June 29, 2008 3:11 PM

A single person making $60k a year is poor? Who knew...

Most residents are against building 1M new units because they believe that this would make San Francisco an unpleasant place to live. While it is certainly true that if you make life here unpleasant enough, rents and home prices would go down, this is probably not the right way to go about it.

I think growing at 10% a decade is fast enough, but it is certainly worth debating.

Posted by: NoeValleyJim at June 29, 2008 6:49 PM

I am a bit confused by the BMR rules.
If there is a 3 person household.

little person makes $0/year
pappa person makes $0/year
mamma person makes $150,000/year

This is an average of $50,000/year per person.
Does this qualify for a BMR in the 100% median
range given "A three person household can make up to $72,300"

Posted by: confused at June 29, 2008 11:18 PM

If you really understand the history behind BMRs, it was exactly that -- the concept of putting impoverished people among successful ones.

no, it is you who doesn't understand the BMR program, evinced by your lack of understanding about the median San Franciscan income.

$60k is not poor in SF, it is firmly entrenched as "middle class". the median income for a SF HOUSEHOLD in 2006 was $65,497. This means that half the HOUSEHOLDS (not people, households) make less than $65,497 in the city of SF.

the BMR program was a theoretical attempt, and a very bad idea, of allowing middle income to buy a house or condo. teachers, police, firefighters, librarians, etc
You seem to have a hard time understanding BMR and Section 8.

Sort of like confusing French Laundry with the Whiz Burger. (although I personally like the Whiz Burger 1000% more).

I'll stop arguing now, because I assume you are a troll or simply very very ignorant.

Median income from Bay Area Census

Posted by: ex SF-er at June 30, 2008 5:32 AM

confused:

Using your example, in order to qualify for BMR:
mama bear can make $72,299
papa can be a stay at home bear
baby bear is with papa.

$72,300 is the maximum the HOUSEHOLD of 3 can make. (in other words, all 3 combined)

If mama bear made $40k
and papa bear made $40k
and baby bear was in daycare
they would not qualify.

Posted by: ex SF-er at June 30, 2008 6:13 AM

Greetings all,

I am the Director of the Homeownership Program at the Mayor's Office of Housing - the BMR program is one of the programs we offer for low and moderate income first time homebuyers. I wanted to clear up some issues folks raised in response to this story. Firstly, although the City does not have the power to regulate HOA dues - we do build them into the initial pricing of the units -that is to say, the higher the HOA dues are initially, the lower the price of the unit is to begin with. What we cannot regulate is the INCREASES in the HOA dues, but the initial price for the BMR units is by definition, affordable because it is 33% of someone's gross income at 100% or the area median income, including PITI and HOA dues. Additionally, there is no regulation whatsoever on a buyer's income going up after they purchase a BMR unit.

Like everything else in life, the BMR program is a great solution for some, but not for everyone. Everyone has a different situation, like how long they want to own the home, whether or not they'll need more room or less room in 5 or ten years, and how the equity they expect relates to their long term financial plans. The only way to make a good decision about whether or not the BMR program is right for you is to do your homework as a consumer - There are five homeownership counseling agencies in SF that offer counseling for free to first time homebuyers- it is a must for BMR applicants, but even if you decide you don't want to apply for any special assistance programs it's a good place to get started. In addition to BMRs, the City offers downpayment assistance, mortgage credit certificates, and special loans to teachers and police officers. On top of that there are programs through the State of CA, and the private sector that we always try to leverage with the City's programs to assist first time homebuyers.

To get contact info for the homeownership counseling agencies and the other first time homebuyer programs, check out our website:

http://www.sfgov.org/site/moh_index.asp?id=47989

Posted by: Myrna Melgar at June 30, 2008 12:22 PM

" one of the programs we offer for low and moderate income first time homebuyer"

You're welcome, ex-SF'er

Posted by: Bingo Lover at June 30, 2008 12:56 PM

The math on the BMR program seems a bit off to me. Assuming someone makes $60,000 a year, their monthly gross is $5000. 33% of $5000 is $1682.

The 1 bedroom with parking is $266,698. The mortage with 20% down is $1,245 a month. HOA is $600. We're already at $1,845. Taxes will add another $225 or so each month. That comes out to $2,070 or 41% of gross income.

I guess the 1B units without parking fit within in the BMR guideliness, but certainly not the ones with parking.

Posted by: Math Major at June 30, 2008 1:32 PM

Math Major,

You are correct. Parking is extra - as a transit first City, the Planning commission has separated parking from the "bundle of goods" that make up housing - it is what it is. Parking is offered by the developer at a market price for BMR buyers and Market rate buyers, although when parking is offered for sale to the market price buyers, a small discount is given in the price to the BMR buyers for their units, and they can buy parking if they can afford it.

Posted by: myrna melgar at June 30, 2008 1:49 PM

Thanks for clarifying, that makes sense.

Posted by: Math Major at June 30, 2008 1:54 PM

"There are five homeownership counseling agencies in SF that offer counseling for free..."

This seems like a great opportunity to consolidate. Five separate agencies might be overkill.

Posted by: The Milkshake of Despair at June 30, 2008 2:08 PM

" one of the programs we offer for low and moderate income first time homebuyer"

yes, it says low and moderate.

and I showed you above that the income limits clearly incorporate the median wage earner in SF.

again, a far cry from inner city ghetto memphis.

so I rehash: what does an article about having inner city ghetto people rent in the suburbs have to do with a program trying to get median income people to buy in an expensive city?

"I'll take my answer off the air".

Posted by: ex SF-er at June 30, 2008 2:37 PM

I can't help it if you're unable to put 2+2 together.

Posted by: Bingo Lover at June 30, 2008 3:53 PM

What the hell are you talking about Bingo Lover? A low income person in Memphis probably makes $15,000 or less and would be not quite able to purchase a SF BMR unit.

Posted by: anon at June 30, 2008 4:02 PM

You would still need to have a little 'side business'

*wink*

in order to be able to live here with that income/debt equity ratio thing going on.

Posted by: plantguy at June 30, 2008 4:35 PM

^^^Or...you work and get raises. As it says above, the income limits are only in place when you FIRST buy the unit. It's to allow people to buy a home in the first place. I'm sure that many people who have bought a BMR now make considerably more than the income limits (see supervisor Chris Daly, who now makes almost twice as much as the limits). I don't agree with the program, but it is not a program that is bringing in gangsters, and it is VERY much affordable to anyone who is working and getting raises (yes, even public servants get raises - yet if they have a mortgage their fixed housing expenses are exactly that - fixed)

Posted by: anon at June 30, 2008 4:48 PM

We own a BMR unit.

We used to live in a small in-law with poor conditions for five years. We lived thriftily and managed to save a little money for the down payment for the BMR unit. With a stable home, we can now afford having a baby.

Without this program, we could never be able to
afford our home in SF.

I have to admit that we were not very comfortable at first to live with neighbors from different classes, but it is getting better now.

We really appreciate this program and hope others can benefit from it.

Posted by: BMR owner at July 3, 2008 2:04 PM

How far is this place from the gang shootings that have been happening on mission street?

http://cbs5.com/local/mission.district.shooting.2.769229.html

[Editor's Note: About a mile and a half (but we'd be willing to bet you already knew that).]

Posted by: buyer at July 14, 2008 2:42 AM

"How far is this place from the gang shootings that have been happening on mission street?"

Farther than the Fairmont, or Grace Cathedral.

Posted by: fluj at July 14, 2008 9:06 AM

I suppose there are people planning to move to SF who don't know the city very well yet. (Or folks who have never traveled south of California St.)

Mission St is SF's longest street, traversing a multitude of neighborhoods from the Embarcadero to Daly City.

Posted by: Dan at July 14, 2008 9:44 AM

Anyone has the list of the 29 BMR units @ SOMA Grand? Please kindly share. Thanks.

Posted by: arch at July 16, 2008 6:09 PM

I bought a BMR unit in San Francisco 2-1/2 years ago. I'm an assistant editor at a national publication who has lived and worked in San Francisco for more than 20 years (though I've been in my current career only about 8 years). I have a teenage daughter. We spent the past 13 years (before we moved to the BMR) in one (rent-controlled) apartment. Despite the fact that I did not get along with my landlady (who lived right across the garden from us), and the fact that I was tired of living in a converted barn/cottage that, while charming and unique, had no closets, no bathtub, and no central heat, I could not justify tripling my rent just to move to a nicer two-bedroom rental.

The BMR program offered a wonderful solution: Pay the same monthly amount as if I were moving to a new rental, only I get to own it. And actually, there is no way I could get a 2-bedroom apartment in the city as nice as this for what I pay here. It is very expensive given my salary, but moving to a new rental would have been equally very expensive. And thankfully, as my salary increases each year it's getting a bit easier to manage.

As for the community here: BMR owners have exactly the same rights as all other owners in an HOA. Yes, it is weird at times knowing that most of my neighbors are much wealthier than me, but there are some very nice people here and I have had no problem getting along with my neighbors.

I do not think BMR units are for everyone. HOA dues can increase unexpectedly (though I am in a new building, where it is much less likely compared to an old building that may need significant repairs). And the restrictions on resale are, to my mind, basically impossible to quantify until you try to sell. That is, I don't really know how hard it will be to sell this place when the time comes, but presumably that's true for any homeowner. But worst of all: the rules prohibit leaving the unit to one's heirs, so I can't leave my place to my daughter. That just kills me, so eventually, once my salary increases enough, I want to sell this place and buy a house I can eventually leave to her. Hopefully, I will be able to sell it when the time comes.

Posted by: ac at August 26, 2008 8:00 PM

Are you one of those editor/gang-members that Bingo Lover was trying to warn us about?

Posted by: NoeValleyJim at August 26, 2008 8:58 PM

I read a lot about this program has it changed for the better in 2010 I am on full disability and am homeless (living on a friends couch) and collect a check of 1492.00 per month where or what should i do

Brad

Posted by: Brad at April 5, 2010 4:32 AM

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