Just how expensive is housing in San Francisco?

It's so expensive, households earning more than $100,000 a year need assistance buying a home.

And, for the first time it has aimed a housing assistance program at households with above median income, the Federal Home Loan Bank of San Francisco is raising funds to make it so.

Aimed at expanding home ownership opportunities for San Francisco's workers, the San Francisco Workforce Housing Initiative allows home buyers earning up to $103,320 to purchase a home worth up to $475,000, provided the home is within commuting distance of the city. The buyer will only have to come up with 1 percent of the purchase price, which can be used toward the down payment or closing costs.

The program includes a first mortgage of 97 percent of the purchase price, and a deferred second mortgage loan of up to 6 percent to reduce the interest rate on the first mortgage or fund the down payment or closing costs. The second loan also will be used to lower the cost of mortgage insurance provided by the California Housing Finance Agency. The second mortgage will accrue simple interest at a fixed rate of about 5 percent. The second will become due only if the house is sold, the first mortgage loan is refinanced, or the first and second mortgage loans reach maturity.

Participating lenders will sell the loans for servicing to First Nationwide Mortgage Corp., a subsidiary of the California Federal Bank. Citigroup agreed May 21 to acquire Cal Fed's parent company, thrift Golden State Bancorp, for about $5.8 billion in stock and cash.

The Home Loan Bank, known more for lower-income family assistance including a new savings matching program, will provide the liquidity for the middle-income program's first mortgages by purchasing up to $129 million of mortgage revenue bonds issued by another partner, the California Rural Home Mortgage Finance Authority.

Critical to the program, expected to be launched in January 2003, is the new San Francisco Workforce Housing Fund, created by the federal bank along with the San Francisco Chamber of Commerce.

The fund will help with liquidity for a portion of the second mortgages.

"The Chamber is, today, embarking on a campaign to raise $4 million for the Workforce Housing Fund from private sources, including employers, pension funds, foundations, and employee groups," said Roberta Achtenberg, a spokeswoman for the San Francisco chamber.

Home buyers may purchase single-family detached, condominiums, and townhomes and they can piggy back other home ownership assistance programs to increase affordability. It's all designed to enable some 300 middle-income households to purchase a home they might not otherwise be able to afford.

"Working San Franciscans, including teachers, nurses, public safety officers, and others with a solid mid-level salary, are frustrated at their inability to buy a home in San Francisco or within a reasonable distance," she added.

The median price of a home in the San Francisco Bay Area was $402,000 in April 2002,

While in San Francisco it was $526,000, according to La Jolla, CA-based Dataquick Information Systems.

As a result, area employers find it difficult to attract and retain middle-income talent. The high cost of housing also has driven up wages and put San Francisco businesses at a competitive disadvantage, she said.

Similar middle-income housing assistance programs could follow in Los Angeles, San Diego, Sacramento, and other high-cost California cities.

Published: May 23, 2002

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.