Hopeful San Francisco homebuyers in a red-hot real estate market could receive more help from City Hall under a proposal to reinvest $50 million from the pension fund into a program that offers loans for those looking to buy their first houses.
The prospect of an increased number of loans for first-time homebuyers comes amid a housing crisis of soaring rents and home prices.
It is also a time when a few major housing developments are being built in The City promising to provide middle-class housing, such as the development by Lennar Urban of Hunters Point Shipyard and projects slated for the former Schlage Lock site and Park Merced.
Supervisor Malia Cohen requested that the San Francisco Employees' Retirement System analyze the proposal. She also sits on the board overseeing that department.
"We should be investing in our backyard," Cohen said. "I don't think it would be the panacea. It would potentially be a strong and valuable tool to help people."
There is no shortage of demand for the first-time homebuyers program offered by the Mayor's Office of Housing known as the Down Payment Assistance Loan Program. The program provides financial assistance to low- to moderate-income first-time homebuyers.
In March, Mayor Ed Lee increased the permissible size of the loans from $100,000 to $200,000 to reflect the reality of the market. At that time, the median home sales price was $800,000. The program was created with the passage of Proposition A in 1996.
Maria Benjamin, director of homeownership programs for the Mayor's Office of Housing, said since the program began in 1997, there have been more than 550 loans provided. The loans are to be paid back in 40 years or when the home is sold. There are currently 400 outstanding loans with a value of a combined $30.7 million. Paid-off mortgages totaled 145. The City lost five loans totaling $287,000 due to foreclosure. Under the 2012 Housing Trust Fund, The City has $15 million for the program during the next five years.
"The perception is you can't afford a house here, so don't even look," Benjamin said.
That potentially could start to change with a greater investment in the program.
Board of directors President Victor Makras, who is supportive of the idea, said analysis of the proposal is expected at the board's meeting Wednesday.
Makras said he thought the investment in the program could potentially yield a return in the 7 percent range whereas some low-performing bonds in the pension fund portfolio have a 2 to 3 percent range.
Recipients of the loan repay the loan amount plus 31 percent of the property's value appreciation.