Designated as one of the development’s required affordable units, the 722-square-foot unit #502 at Yerba Buena Lofts (855 Folsom Street) was purchased as new for a below market rate (BMR) price of $306,500 of 2003.

In 2009, the Yerba Buena Lofts Homeowner’s Association filed a lien on unit #502 for unpaid HOA dues which are currently $463 per month. By 2010, the first notice of default had been filed by the lender. And with over $40,000 past due, the loft was foreclosed upon by the bank in July of 2014.

With the resale price for the unit having been set by the Mayor’s Office of Housing and Community Development at $285,669, the unit is now back on the market with applications due on 8/26/16 and income limits of $75,400 for an individual, $86,150 for a couple and $96,950 for a three-person household.

And yes, the refrigerator and dishwasher appear to have gone the way of the previous owner.

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Comments from “Plugged-In” Readers

  1. Posted by Mark F.

    It’s time this BMR “ownership” program was ended. I can see the justification for the BMR rental program, but not this program. You don’t actually “own” your condo anyway, as there are restrictions on the resale price.

  2. Posted by Sara Short

    Subsidized luxury units for a few lottery winners, is a horrible idea, that only gives a few special privileges and leaves everyone else unfairly out in the cold.

    • Posted by DrPants

      Units are NOT constructed to the same standard as Market Rate units. The BMR units are in the same building yes, but all the insides like cabinets, appliances etc are all low(est) grade.

      • Posted by True

        I see a 20 foot ceiling with the same concrete construction. Seems constructed to the same standard. The appliances are not even “luxury” in the rest of the units.

        • Posted by Hunter

          I’d say in general these days, things selling at “luxury” prices are cheaply built with mediocre appliances and interiors. But as long as people keep paying for it, developers don’t need to really put in nicer hardware.

        • Posted by DrPants

          If your standard of living is concert walls and flooring, have at it I guess. All the ‘base’ building foundation is the same whether in a luxury, or 100% BMR complex. Building codes are building codes. The difference comes in furnishings like flooring, fixtures, and appliances. All/most of which seem to be ripped out of this unit.

    • Posted by sockettome

      Luxury is word that gets thrown around a lot these days on undeserving buildings. The “projects” in SF have better layouts and finishes than this building.

  3. Posted by Sara Short

    Looks like a “luxury” jail cell…….

  4. Posted by curmudgeon

    value is down since 2003? Wow. But if the owner had managed to hold it, that wouldn’t have been the case, correct? I thought the resale value of BMR units was capped at inflation or something, but wouldn’t go down unless ALL real estate values go down (clearly not the case 2003 to 2016). Perhaps the MOH took this opportunity to more deeply subsidize it? By the way, I’m in full agreement that BMR ownership is dumb….should either be rentals in the same building, or simply pay to produce rental housing elsewhere. A BMR unit paying $463 a month in HOA’s is ridiculous.

    • Posted by Hunter

      Maybe because it needs work and the previous owner took some of the appliances (downgrading the value?)…does seem weird that it was priced that high in 2003.

  5. Posted by AnonAnon

    How much would they have been allowed to sell it for in say January 2016?

  6. Posted by alberto rossi

    fridge and dishwasher are gone, but stove (sans hood) is still there?

  7. Posted by primeminister

    Failure to pay monthly HOAs? Shocking.

  8. Posted by SFRealist

    From what I’ve been told, another problem is the buyer still has to qualify for a mortgage, which isn’t easy at $75K (and presumably a small down payment, few assets). Just speculating, but I wonder if that’s part of the reason that the resale price is down.

    • Posted by Fraser

      I recently looked into BMR sale program. I am retired, I have owned condos before (more than 3 years ago). I was self employed and my retirement is my SS and investments. Sounds good, except a couple of years ago my parents passed and I inherited couple of hundred $. Which I am grateful, but the program counts this as all assets because it has never been in a 401k? Which puts me over the income limit. If I had a pension of equal value it is not considered assets?

      I am an architect and have been on the board of several HOA. I would think the condo would hope to have a buyer who would not be foreclosed upon and understand how condos work. Plus it would help if the User had reserve capital. Yes I am more fortunate than many, and the spiral stair could be an issue someday. If I gave the inheritance back to my parents estate I may qualify.

      • Posted by SFRealist

        Interesting. So the city requires a maximum income and maximum assets, but still requires the buyer to get a mortgage from a bank. If those parameters are set unrealistically, no bank will lend, and the unit sits empty. This program, while well intentioned, may not be working.

        • Posted by JR "Bob" Dobbs

          There is not really a maximum asset test. But the city does factor in assets in a way that would only exclude you if your assets were quite high, in which case you should be excluded, although I do not see the sense in treating retirement savings differently. Looks to me like “excess assets” could be managed by simply parking them in something other than cash. Here is the formula from the city’s site:

          Asset Test for BMR Buyers
          MOHCD will also apply an asset test to all applicants. Assets include all savings, checking accounts, gifts and other sources of money (cash) other than retirement accounts. (If your retirement account is currently generating income — i.e. you are living off of your retirement — you must count this money as income on the BMR application.) Assets also include any money that will be used toward a down payment on a BMR unit. Ten percent (10%) of all assets over $60,000 will be added to the total household income. Retirement savings will be excluded from the asset test, but all retirement statements should be included in the application package.
          Example:
          Household of 4 earns $85,000 a year
          Total household cash assets = $140,000
          First $60,000 of assets is excused: $140,000 – $60,000 = $80,000 in remaining assets
          10% of remaining assets is added to income: $80,000 x 10% = $8,000
          Total amount added to income: $8,000
          New total household income: $85,000 + $8,000 = $93,000

          • Posted by Fraser

            Yes but notice all retirement accounts are excluded, if the Money is or has been in a 401k type of account where there is a penalty for taking out early.

            If it is not or has not been in that type of account then it is all counted as assets. So you can have $250,000 in a 401k [not count] against you asset limit, [but] $250k in any other form adds $25,000 to your income.

            So I would have to include the income from my retirement account and the entire value of the account unless is was or is in a 401k. Assets are assets not just cash.

            FYI by the time i received part of my parents estate I was passed the age to open a 401K account. As to my huge amount of assets, the income from that and from SS is what I live on. All I asked was not to count the assets I have in a managed investment account for my retirement.

          • Posted by JR "Bob" Dobbs

            If one’s retirement account is currently generating income (i.e. you are living off of your retirement), one still needs to count that income on the application. So it doesn’t appear that would make any big difference in your situation as only 10% (after subtracting $60,000) of assets are counted as income. It would matter to a younger buyer who had a retirement account but was not yet drawing on it.

            IMHO, retirement assets should be treated just like any other asset here. Why should a person receive subsidized housing if they have substantial assets – whether those be in a retirement account or elsewhere? One can just use his or her assets and income to buy or rent like everyone else does. I don’t see any injustice here.

          • Posted by Fraser

            The quote “injustice” [is] playing by their rules. If you have managed to create a retirement portfolio worth $400,000 not in an 401k it is all counted as an asset. If you have $400,000 in an 401k it is not counted as an asset.

          • Posted by JR "Bob" Dobbs

            Fraser, if one is drawing income from a $400,000 retirement account (i.e. , if one is retired, like you), then that income is counted toward the BMR limits. It is not really that different. My point was that people with $400,000 in assets should not be receiving subsidized housing.

            If you want to be able to take advantage of the nonsensical rules that permit certain fairly well-off individuals to receive subsidized housing designed for those who are not as well off, just stick your funds in an annuity that doesn’t provide any payments for a few years. That should do it as I read the rules (and this legal advice is worth every penny you’re paying for it).

          • Posted by redseca2

            So, could you have made several mid-six figure purchases at say, Sotheby’s art auctions in the last few years and still qualify? Maybe some used dishes. Wright got $10,000 last week for 4 ashtrays from the Four Seasons restaurant auction.

      • Posted by sockettome

        Fraser – You wouldn’t qualify anyway. The BMR program is for first time buyers only.

        • Posted by folderpete

          I believe the definition of “1st time buyer” means that one hasn’t owned in a period of time – i.e. 3 yrs or 5 yrs.

  9. Posted by BobN

    Ownership may seem dumb, but there are benefits even if the owner doesn’t get all the appreciation. There’s a supposed “pride of ownership” that benefits the City as well if the owner takes better care of the property.

  10. Posted by ohmy

    I wanna see three people living in that unit.

  11. Posted by jamesjr

    Why was it valued at 303K in 2003 but now is worth only 286K, according to the city?

    Prices have gone up by at least 50% since then.

    • Posted by jwb

      In 2003 a fungus could have qualified for the mortgage needed to purchase this place. Today if you qualify for the BMR program is will be difficult to also qualify for the mortgage.

      • Posted by folderpete

        Really? At $286k, put 10% down leaves 260,000 for a mort. @ 3.9% 30 yr, the payments are $1260, HOA = $468, RE tx ~ $300/. So that totals ~ $2028 which comes in just under 33% of the max AMI. for a single person. Tight – yes; but not impossible.

        The program is narrowly beneficial. If you are paying $2000 in rent, such a scheme would actually be lower than rent (with tax benies) – and you do accrue a bit of equity a decade or so out.

        • Posted by SFRealist

          Consider trying to save $28K for a down payment on a $70K salary, especially if you live here. Not an easy thing.

          • Posted by Iolderpete

            Yes, “saving” the DP is problematic for many; but as I said, there’s a ‘narrow’ benefit. I know two people – one who has backing from family, the other … not. One could *possibly* swing the deal (actually makes <$70k) with a large "inheritance"; the other … ?

            But the benefit to 'owning' vs 'renting' is, as always, in the long term. If you want to spend the rest of your life there, then the fixed monthlies are a blessing (rent 'always' goes up – unless you have RC, in which case it goes 'down'). And after 30 yrs, they drop dramatically. Rent never does – even with RC.

            I'll leave it to others to debate the subsidizing of 'rental vs ownership' orthodoxy. With the shifting sands of gentrification, many are going to find they can't afford to live in a City they can "afford" to live in any more.

        • Posted by DrPants

          You left out all the closing fees which averages around 10% of the sale price. So in total you need closer to 300k. 30k down. At 70k salary, say about 25% goes to taxes.

          52k left.
          Estimated 2k/month for current living expenditures 2×12 = 24k. This is probably on the low end.

          28.5k left, and which if you save all of that can barely get you 10% of the down. Possible, but if you wanted to get into the BMR program you have to ‘plan’ at least a year in advance.

  12. Posted by HousingWonk

    Yes, because one foreclosure of one single BMR unit during the height of the Great Recession is an indictment of an entire program. (I dunno – what could have happened to the owner and their employment in 2009 that would cause them to stop paying their HOA dues? I dunno…seems totally a mystery.) By that logic, the phonebook sized list of foreclosures of market rate condos and single family homes during the Great Recession means we should stop the sale of housing units in the entire market.

    I’m not sure what this blog post is supposed to demonstrate exactly. Maybe its meant as a Rorschach test for the ideological biases of the Socketsite commentariat.

    • Posted by SFRealist

      I’m not indicting the program based on one foreclosure. I’m indicting it because it’s apparently difficult to qualify for a mortgage based on the parameters of maximum income and assets. This unit has apparently sat empty for the last two years. An empty unit doesn’t help anyone.

      Maybe this is the only one of its kind in all of San Francisco. Or maybe it signifies a problem in the program.

      • Posted by curmudgeon

        exactly. The BMR ownership program is so narrowly targeted, and with such modest benefits to the “owner” that it really should be terminated for a BMR rental program which provides much better assistance. “Winning” a BMR ownership condo is definitely a pyrrhic victory for most.

        • Posted by Iolderpete

          For a v few, its just what the Dr. ordered. Definitely not a mass-market product.

      • Posted by HousingWonk

        Well since you have provided zero evidence that the loan qualification for a BMR unit is an actual systemic problem, you have indeed extrapolated from a single anecdote. The plural of which is not anecdata. A large BMR project in Mid-Market (1400 Mission Street) has recently completely sold old. So there’s a counter-factual to your supposition.

        By the way, this “pile on a program helping the not wealthy” set of comments is running close to 40 comments. Again, this is far more helpful as a Rorschach test than anything else.

        • Posted by SFRealist

          Actually this unit demonstrates a point I have heard from friends who work in real estate lending. They have access to numerous data points.

          What I am saying is perhaps THIS program isn’t working. Which means that it may make sense to move the resources devoted to THIS program to OTHER programs that might be more effective at helping more people.

          But hey, if you want to spin my criticism of this program as an attack on affordable housing generally, have at it.

      • Posted by HousingWonk

        Also too, if you bothered to read the post – including the TITLE, the unit was foreclosed by the lender two years ago and was BANK owned. Doubtful this was an issue with the buyer being able to secure a loan. More likely a combination of usual complete snail’s pace rate that it takes bank’s to dispose of their REO units combined with MOHCD slowness in processing the sale (which is an ongoing issues with MOHCD)

  13. Posted by alberto rossi

    but it’s Saitowitz, so it’s starchitecture!

  14. Posted by Drew P

    An old housemate of mine worked on this building as an intern at Saitowitz’s office ages ago. I’m surprised the author didn’t mention the architect.

  15. Posted by Sabbie

    FYI the SFAR is trying to get two measures on the ballot in November. One would raise the affordable housing cap to $112k for a family of four. Sounds pretty good. The other would introduce competitive bidding for affordable housing. I’m not too familiar with that issue.

    [Editor’s Note: Ballot Measure to Double Income Limit for Affordable Housing in S.F. and Initiative to Require Competitive Bidding for Affordable Housing in SF.]

  16. Posted by alberto rossi

    So the BMR buyer who’s already having trouble qualifying for the loan while still maintaining eligibility for the program is also supposed to come up with the money to replace the missing appliances and fixtures and who knows whatever else has gone missing?

  17. Posted by SeeHSee

    I was an original purchaser in YBL. All units had identical finishes, regardless of size/price-point. The kitchen featured in the photo is essentially all-orignal. The units came with a stainless-steel fronted dishwasher. A refridgerator could be purchased from the design center or separately. The black tile back-splash/wall in this kitchen was a later addition, in original kitchens this wall was simply painted black.

    A challenge for the design center at YBL was that Saitowitz wanted standardized interiors that reflected his design concept. There as not option to upgrade/change anything in baths/kitchens, except addling glass shower doors or a narrow range of appliance choices. Flooring was the major upgrade option, and through tight restrictions essentially strongarmed purchasers into having them installed in-house at huge mark-ups. Lighting, although limited, was another upgrade.

    The only thing I found ingenious about the design of YBL was the way the parking garage was built into the interior of the building. Otherwise, I hated everthing about living there. The finishes were so cheap that, when I sold after living there just six months, they already appeared worn. The building has an evil vibe, the neighborhood is crap, and I was happy to be rid of my unit.

    • Posted by curmudgeon

      I did a tour when it was first open for sale. It is the building that made me really dislike Saitowitz as an architect of spaces in which a human would feel comfortable. Haven’t seen much of his since then that changes my perspective. The vibe in the interior hallways is indeed evil, and so many of the design “solutions” in the units are uncomfortable (like having the frosted glass so you can’t actually choose to see out your window). Ugh.

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