[malandrew]

Don't get me started on this. I helped an friend get into below market rate (BMR) housing in SF. She paid approximately $330k with almost no money down for a 2 bedroom, 2 bath condo in the center of Hayes Valley. Today, equivalent market rate units in her building sell for $1.5k to $2m.

Basically, there is a supply of homes that are available to you at three points: 70%, 90% and 110% of the median income. How these three points are chosen I don't know. Very few are at 110% of median income. Most are available to those that make 70% or 90% of the median income.

The reason this is bullshit is because it's estimated that you need to earn about 400% of the median income to be able to afford a market-rate home in SF. This pretty much leaves everyone between 110% and 400% of the median income without any real options.

Worse yet, by making a policy that covers the just above the center of the income distribution to the bottom, you basically disincentivize those voters from becoming active and involved in supporting solutions that help the entire distribution. Basically those between 110% and 400% end up a permanent minority unable to achieve support for policies that will help their cohort.

Needless to say, I don't live in California anymore, despite earning almost 3x what she earns because I can't really afford to buy into the market. California is fundamentally broken.

[defen]

> She paid approximately $330k with almost no money down for a 2 bedroom, 2 bath condo in the center of Hayes Valley. Today, equivalent market rate units in her building sell for $1.5k to $2m.

How does that work if/when she wants to sell the place? Is there some sort of cap on what she can sell it for?

[malandrew]

She can only sell it for the purchase price adjusted for changes in the median income. If the median income in the city goes up (which it does over time because lower income renters are eventually forced out of the city), then she can sell it for more. It obviously won't increase as fast as market rates, but it will go for more than she purchased it. The house needs to be sold back through the BMR program. It can only be willed if her heir(s) also qualify for the BMR program at the time of death.

At the end of the day, she gets the benefit of not having to tie up cash in home equity. While other people are paying $6000 or more a month in a lease, she's paying a little over $2000 a month in a lease and gets to put all the excess she has into more liquid assets like an index fund.

[jefftk]

There are several ways to handle this, but a common one is to have a deed restriction that sets a maximum resale price and requires the buyer to meet income eligibility criteria.

I wrote some about this, and about how I'm worried that wealthy people could abuse this, in https://www.jefftk.com/p/affordable-housing-workarounds