community spotlight
SFHDC Homeownership Center: Making Ownership a Reality
By Emily Landes
As the Housing Counseling Director for the nonprofit San Francisco Housing Development Corporation’s Homeownership Center, Ed Donaldson receives regular calls from those on the front lines of the mortgage crisis. Many are families in dire financial straits and a large part of Donaldson’s job has been to get these people to realize that their only way out may be to sell their beloved homes. It’s not a heartwarming task, to say the least, and Donaldson is convinced that things are only going to get worse. “I’m an optimistic person, but I don’t think there’s any help coming for these homeowners,” he admits. “I think we have another year of horror stories ahead of us.”
Donaldson is frustrated that these horror stories have far surpassed the happy stories from the Bayview center’s other primary clients: people working to become first-time homeowners. These are the people that Donaldson left the mortgage industry to help three years ago. He wanted to be a part of the positive changes occurring in the neighborhood where he had grown up and where he and his family still live. Over the next decade, the area has 10,000 new units coming online, many of which will be filled by families who have never owned a home before.
When these potential homeowners first arrive at the center, located on Third Street right off the new T-Third line, staff members (all of whom have a real-estate background) do a financial assessment, looking at credit history, employment, income and savings. If all the numbers look good, they can be moved right into classes and workshops designed to teach them what’s involved with buying a home, as well as the affordable housing programs available to them. “When folks leave our workshops, they have a much clearer understanding of what to expect” from the homebuying process, Donaldson explains, including how much they need for a down payment, the necessary credit scores and acceptable debt-to-income ratios.
“We help people understand what a debt-to-income ratio is and that what you qualify for may not necessarily be what you can afford. It’s important to do that kind of assessment and figure out what kind of lifestyle changes may be necessary for accepting that particular program,” he clarifies. Due, in part, to all of this preparation, none of the center’s clients has been in danger of losing their homes. “Our clients have elected to purchase homes that truly were affordable to them,” he says.
Of course, not every client is quite ready for home ownership. Many need to go on the “financial fitness track,” where they’ll learn about making a budget, credit repair and asset-building tools like matching savings accounts. Even with these additional hurdles, most clients who stick with the program are able to find a home within three years. One woman came to the center just as Donaldson started working there. She was “credit challenged,” but worked through those problems, got on a debt reduction program and just purchased a two-bedroom townhouse in Vallejo.
Unfortunately, she’s not the only one of the center’s clients to give up dreams of buying in San Francisco. Donaldson says that many would rather buy a market-rate home outside the city than be subject to the equity restrictions on designated affordable homes here. That desire to create equity is especially strong in Bayview, he says, which has one of the highest homeownership rates in the city. “There’s a culture of ownership that’s here,” he explains. “So, a lot of the people that we counsel, they’ve grown up in homes where they’ve seen their parents purchase their homes at a certain level and now they’re worth $600,000.”
He suggests that if the city changed its approach so that appreciation was tied to the consumer price index (CPI), rather than income levels, it might make the program more attractive to potential owners. Because income levels often lag behind the area’s CPI, “everything around us is going up in price, but the home’s value is not.” He would like to see the city create an affordable housing policy where affordable homes are kept below the state’s appreciation rate, so that they stay affordable, but still appreciate fast enough for families to view the home as a stepping stone to a market-rate unit. He says the city has not ignored his call for an affordable housing overhaul, but that rental policies receive a lot more attention and resources.
“When you look at rentals versus homeownership, the scale is tilted in the direction of rentals. That’s a good thing because people need housing, whether it be home- ownership or rentals, but at the same time I think we need to do more as a city,” he argues. “When you look at the general fund in San Francisco, and when you look at the fact that a good portion of that fund comes from property taxes from homeowners, why can’t we look at ways to use a portion of the general fund to support homeownership in San Francisco?”
But, even with minimal resources directed toward ownership programs, Donaldson stresses that there are still affordable opportunities in San Francisco, if people are willing to be flexible. Many clients come in saying that they only want a single-family home, or that they must have parking or a backyard. He tells them such declarations only limit their options further, and that while they may have to trade off space for location, affordable housing options are available in the city. To make that point even clearer, the center offers to host a housewarming party for all of its new homeowner clients in the hopes of reaching more people and convincing them that owning a home in the city is not an unattainable goal.
For those who have achieved homeownership, the center also offers programs to help people make the most of their property. It teaches classes in home maintenance and instructs clients on how to use the city’s low-interest loan program to repair code violations and take on deferred maintenance. The organization is currently involved with 20 projects that preserve the neighborhood’s existing housing stock and help owners who may have purchased decades ago keep up their buildings. “I’ve gone into some houses where the deferred maintenance is pretty rough,” Donaldson recalls. “And to see those people have an opportunity to repair the homes in a way that’s affordable to them so that they can enjoy their latter years, it’s a heartwarming program.”
As the mortgage crisis deepens, Donaldson needs as much heartwarming as he can get. Luckily, even though foreclosures may be making the headlines now, the center is still putting plenty of attention toward potential first-time owners who may just need a few tools and one-on-one sessions with a staff member to finally realize that their dreams of owning their own home aren’t unattainable after all. “You can literally see the light bulb come on over people’s heads,” he says.
The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. Emily Landes is the managing editor of SF Apartment Magazine and Rental Housing. Copyright © 2007 by SF Apartment Magazine. All rights reserved.