BMR condo Mayor's Office of Housing
The bottom has dropped out of the BMR condo market. And, to boot, owners say new policies by the Mayor's Office of Housing are pressing them to sell at serious losses. Photo by Loi Almeron. Graphic by Will Jarrett.

When Simon and Amy Jansuk won the San Francisco housing lottery for a Below Market Rate unit in 2018, it well and truly felt like winning the lottery. 

The couple and their two children were able to move from a (literally) toxic rental situation into a home of their own on Valencia Street. They landed the unit for $460,000 and, just like that, gained an elusive foothold in San Francisco real estate. 

A decade earlier, Neil Patel felt much the same way. He beat out hundreds of lottery applicants to win the right to buy a one-bedroom unit at Mint Plaza for around $213,000. 

“It started out wonderful. It was wonderful,” recalls Patel via a Zoom call from Dublin, Ireland, where he has lived for the past couple of years while he continues to pay the mortgage, property taxes, HOA fees and other expenses on his empty unit. “In the beginning, it worked.” 

But that was then and this is now. Both the Jansuks, Patel, and other owners of BMR units contacted by Mission Local said they were broadsided when they learned of a 2019 policy change enacted by the Mayor’s Office of Housing and Community Development. They are now being encouraged to price and sell their units at a loss — in some cases, a staggering loss. 

“If Kafka were alive,” sums up one longtime San Francisco real-estate power player, “he’d be writing about the Mayor’s Office of Housing.” 

For the Jansuks, Patel and others, their Gregor Samsa of a home has certainly metamorphosed into a giant cockroach. 

Simon Jansuk is a gardener with the Recreation and Parks Department. He applied for, and received, asylum after immigrating from war-torn South Sudan. Amy Jansuk is an occupational therapist who works with children suffering from developmental delays. It would be very difficult to conceive of a San Francisco family better epitomizing the inclusivity goals of the Below Market-Rate program. Surely these are the people San Francisco should be helping to stay and raise their children in our parodically unaffordable, family-unfriendly city. 

But cohabiting with a 10-year-old and a 7-year-old in an 833-square-foot unit was no longer tenable. The Jansuks hoped to sell their home and use the tightly capped equity they’d built up to move on, while granting an entree into San Francisco home-ownership to another modest-earning city family. 

But that’s not necessarily in the cards. Prior to 2019, BMR units simply had a Mayor’s Office of Housing-set price, based on that tightly capped equity owners had amassed through the years; sellers could price the units for less if offers were slow coming in, but not for more. But that system has changed: The Mayor’s Office of Housing now calculates both a “maximum” price based on the owner’s limited equity and an “affordable” price, which disregards the owner and simply focuses on what a buyer of limited means could afford to pay.

This lower number is marketed to would-be buyers, even if the seller has no intention of letting go of the home at that amount — and, crucially, a buyer who pays anything more than the rock-bottom “affordable” price is no longer eligible for city loan assistance. 

Now, that’s a big deal: The Below Market-Rate Down Payment Assistance Loan Program (DALP) is a loan of up to 20 percent of the unit’s selling price. Which is now verboten for anyone paying over the bare minimum.  

It’s all a big, fat incentive for a buyer to not pay more than the “affordable” price. And that’d be a problem for any seller, but it’s an especially vexing one for the Jansuks. Their “affordable price” allotted to them by the Mayor’s Office of Housing is $386,263 — some $74,000 less than they paid for their home just four years prior. It’s a gaping $152,000 less than the maximum allowable price at which they could sell using the housing office’s own pricing calculator

The “affordable” price of $386,263 is, in fact, $25,000 less than the principal on the Jansuk’s loan. If we’re going to acknowledge that the BMR program exists in large part to assist people like the Jansuks and keep them in the city, it’s hard to explain why we could then justify a program that subsequently undercuts and impoverishes them — and severely disincentivizes owners from selling an unwanted unit during a raging housing crisis. 

“It’s a visceral response. It’s crushing,” says Amy Jansuk. “The fact they’re asking us to start at that price and then negotiate with people is exhausting. It feels like everything we worked for is starting to deteriorate.” 

Mayor’s Office of Housing and Community Development materials clearly inform would-be BMR home-buyers that they won’t receive loan assistance if they pay more than the bare minimum “affordable” price. They are also instructed that if they pay more than that rock-bottom price, they may not make their money back when they resell the unit.

This situation is not a one-off. After 14 years of paying down his unit, Patel says the “affordable” price he was assigned was only around $30,000 more than he paid for the unit — all the way back in 2008.

Another BMR owner contacted by Mission Local calculated that her “affordable” price would put her in the hole more than $21,000 after factoring  in closing costs, mandatory inspections and sellers’ fees, and that’s before taking into account years of property taxes, mortgage payments and paying all of the above during a selling process that routinely stretches past six months. 

Why would the Mayor’s Office of Housing do this? As is the case with so much of what ails San Francisco, everyone appeared to have the best of intentions. 

In a nutshell: In recent years, there was an increasing divergence between the amounts BMR owners amassing limited equity were entitled to sell for and the amount the limited-income buyers they were entitled to sell to could potentially pay.

BMR owners were able to price their homes at rates which “exceeded the affordability of a household within the qualifying income range,” explains Mayor’s Office of Housing spokeswoman Anne Stanley. 

So, that was a problem. Publicizing both a set “affordable” price and set “maximum” price, Stanley continues, “ensures that new buyers know that they can negotiate with the seller to get an affordable purchase price.” 

But that’s not really a solution. It takes into account that buyers of limited means can make offers, but doesn’t take into account whether sellers have any interest in accepting them, or can even afford to accept them. It leans hard on sellers to potentially make economically devastating decisions, when protecting their fragile economic state was why they were given a chance to get into this housing program in the first place.  

The city pits BMR buyers and sellers against each other, and conveniently backs into the hedges: It creates a simulacrum of market conditions without ever acknowledging its own invisible hand shaping this market. 

“There’s no question about it: This screws the sellers. … Who is going to want to participate in a program like this?”

Supervisor myrna Melgar

“There’s no question about it: This screws the sellers,” sums up Supervisor Myrna Melgar, herself an alumna of the Mayor’s Office of Housing. “What they are doing is ensuring these units are affordable — but instead of doing it on the public dime, they are doing it at the expense of the family who is selling. 

“I would go further,” she continues, “and say this creates mistrust in the program. Who is going to want to participate in a program like this? And have your family on the hook for a debt?”

“Kafkaesque,” it turns out, is not an attractive descriptor for family housing.  

Neil Patel describes his unit and building as excellent. But he hasn’t been able to sell his home, despite listing it in November, 2021 — and pricing it to be the lowest one-bedroom BMR unit on the market. “It’s not the price,” he sums up. “It’s the restrictions. I am absolutely stuck. I cannot get out of the program.” 

In April, 2020, real estate agent Robert Belli held a housing lottery for a downtown unit. Sixty-seven people applied. In December, 2021, he held another lottery for a functionally identical unit with a similar price and located in the same building. And there were only five applicants.

Quite simply, the demand for BMR units has hit rock bottom, and started to dig. And that’s counter-intuitive: The city is in the depths of an affordable housing crisis. But hardly anyone seems to want to buy the affordable homes that we have. 

Many of the reasons behind this are beyond the control of the Mayor’s Office of Housing: a deteriorating and dodgy downtown; young professionals working remotely and feeling no need to tether themselves to the city; interest rates conjuring up mental imagery of Jimmy Carter wearing a custard-colored cardigan. 

Other factors, however, do fall on the city and mayor’s housing office. For years, the process of putting people into the BMR units extracted from market-rate developers has been Byzantine in its complexity and Soviet in its efficiency. Half a dozen real-estate agents told us that six to eight months is a normal turnaround to sell and repopulate a unit — and that’s if all goes well. 

As of last week, 62 San Francisco BMR ownership units and 287 BMR rentals had been sitting vacant for 30 days or more.

So, times were already tough with buyers few and far between, and now sellers are saddled with a system that they complain is coercive. In correspondences with anguished BMR residents, the Mayor’s Office of Housing insists that its new pricing mechanism isn’t forcing owners to sell at a loss. But that’s a bit cute: The Mayor’s office of Housing also admits that more recent BMR units are advertised only under the affordable price, even if the seller has made it clear that he or she can’t or won’t sell at that price. 

Naturally, this poisons the relationship between the would-be buyer and the seller; any buyer coming in with expectations of paying $386,000 for a unit will understandably be apprehensive when informed that, actually, the price is $150,000 north of that. 

“I am absolutely stuck. I cannot get out of the program.” 

BMR homeowner Neil Patel

When the buyers and sellers can’t agree, it accentuates the legendarily molasses-like nature of the Mayor’s Office of Housing; additional buyers, if there are any, must be vetted. This adds weeks and weeks to a process that was already stretching to months and months, and adds to the seller’s carrying costs. 

But limiting the DALP loan to only would-be homeowners who pay the bare minimum does more than just alter a buyer’s mindset: It takes money out of their pocket. People in the market to buy BMR units don’t tend to have tens of thousands of extra dollars socked away, and this deprives them of a potential five- or six-digit city loan. 

Literature from the Mayor’s Office of Housing sternly warns would-be buyers that “If you pay more than the affordable price now, you might not be able to sell for more than the affordable price as calculated when you sell.”

All of this, to put it mildly, is a hell of a disincentive for anyone to shell out more than the minimum. 

Photo by Lola M. Chavez

Neil Patel’s story is, in many ways, a dark mirror of both his former neighborhood’s and his former city’s. When he bought his downtown BMR unit in 2008, he was in the hospitality field; he worked in conference sales for San Francisco hotels. 

Needless to say, that profession evaporated during the pandemic, and so did Patel’s career. He relocated to Ireland to earn an MBA and is now a sales manager in the tech field. 

His San Francisco home has become an albatross around his neck. He began the process of selling it in August of last year, and put it on the market in November, 2021. He has had hardly a bite, and the few inquiries he’s received were from people hopeful of paying the bare minimum. 

The only advice he says he’s gotten from the Mayor’s Office of Housing is to keep lowering the price, but he notes that his unit is already the lowest-priced one-bedroom home in the city’s BMR market. “It’s not the price,” he sums up. “It’s the restrictions. I am absolutely stuck. I cannot get out of the program.” 

Patel says he simply can’t afford to sell the home at the city’s “affordable” price; he is exploring the possibilities of foreclosure and bankruptcy. 

This, for the Jansuks, is a cautionary tale. BMR dwellers in San Francisco are subject to many of the vagaries and negative consequences of owning real estate. But the positive elements are, by design, constrained. 

“Simon and I are working so hard,” Amy Jansuk says. “He is working a lot of extra hours. I am filling every gap in my schedule. I feel like we are getting pretty depleted. We don’t have family here [to help with the kids]. And now there’s the potential for us to be in debt and owe the bank more?” 

The Jansuks have priced their unit at $485,000. Any less, they say, and they’re losing money on the deal.

San Francisco is committed to ensuring that the right people can afford its Below Market-Rate units. But that demands we ask the question: Then what? 


Your contribution is appreciated.

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Managing Editor/Columnist. Joe was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left.

“Your humble narrator” was a writer and columnist for SF Weekly from 2007 to 2015, and a senior editor at San Francisco Magazine from 2015 to 2017. You may also have read his work in the Guardian (U.S. and U.K.); San Francisco Public Press; San Francisco Chronicle; San Francisco Examiner; Dallas Morning News; and elsewhere.

He resides in the Excelsior with his wife and three (!) kids, 4.3 miles from his birthplace and 5,474 from hers.

The Northern California branch of the Society of Professional Journalists named Eskenazi the 2019 Journalist of the Year.

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  1. People are entitled to whatever opinion they have about a program they don’t know much about but please recognize that BMR owners are teachers, non-profit staff, artists, middle class (in most places but chronically broke in SF) families, and disabled people. These are the people who fall into the SF donut hole of income. This program is very small and limited and needs better oversight. But unless you want to see SF be completely filled with the haves-a lot, this program helps people like the rest stay in the city.

    1. I think they should probably move out if they can’t afford it. I don’t get why an artist should get preference to live in the city over, let’s say, a small business owner?

  2. The BMR program isn’t really made for people who want to leave the country during a pandemic. It is for people making a long-term commitment to SF.

  3. I’ve owned a BMR condo in San Francisco since 2011 and have benefited from much lower and more stable housing costs than if I were renting, all while building equity in my home, and being able to continue living in San Francisco. I’m glad to see several commenters express similar thoughts and feelings.

    My takeaway from this article is that City Supervisors need to ask MOHCD to explain their changing of the rules and publishing two possible purchase prices in resale ads. In particular, where was the announcement of this change? Where was the notification to BMR owners?
    MOHCD should also be asked to explain how they arrive at an “affordable price.” The calculation for the regular BMR resale price is tied to Area Median Income (AMI). Prices could always be negotiated downward, depending upon the seller’s motivation to sell, so with a maximum sale price as guidance, there’s no need I can see for listing a lower price. But let’s first ask MOHCD how they determine this lower price, as AMI clearly is not the determining factor.

    If there are City Supervisors reading this comment, perhaps a Government Audit and Oversight Committee hearing could be held to ask these questions: What notification of a rule change did MOHCD make so that BMR owners were made aware of it before it came time for them to sell? And, how does MOHCD arrive at an “affordable price.”

    As an owner in one of the BMR ownership programs (there’s more than one), I can attest there was no notification to BMR owners of the rule change. None of my neighbors in a 100% BMR development received such a notice. My husband and I noticed two prices being offered in resale listings at our development a couple of years ago, but didn’t understand why because no notice of a rule change was ever made clear by MOHCD.

    But apart from failing to ask the relevant questions, my criticism of this article is the negative descriptions of BMR owners throughout. Readers are left to believe we’re all a bunch of suckers with an albatross around our neck. This article does a terrible disservice to BMR owners who truly need to sell right now. It discourages folks who might qualify for a BMR home from educating themselves further on the opportunity and applying for a home that could very well benefit them for years to come, helping them to stay in San Francisco, and to build equity they wouldn’t have if they rented. It might even discourage lenders from offering mortgages on BMR homes. This article raises a few interesting questions, but that value is lost due to the blatant bias against BMR ownership revealed by the author.

  4. You are an incredibly good investigative journalist. Finally, I have an idea how this program is meant to work but failed, like all the millions thrown at housing issues. The failures without accountability are enormous. Someone needs to answer for this and offer a resolution.

  5. This sound exactly like what SF citizens are asking for. Owners are evil and always, in any foreseeable or unforseen case, “deserve” to lose money or barely break even. as someone that applied for these BMR units years ago, before understanding how SF sees owners, I am glad I never “won” the BMR lottery.

  6. Why would anyone feel entitled to make back their property tax?The sewers are swallowing suvs. They lived here and used the many services those pay for. It was intended to keep people in the community not as an opportunity to cash out all past housing expenses.

    1. No one use more “services” than vagrants and they no taxes. Not to mention, some of the most profitable businesses in the city pay no taxes, meth and fentanyl suppliers.

  7. The housing market is the problem, not the city program. Right now is a terrible time to sell a house regardless of it’s a BMR unit or not. In Patel’s case, no one thinks now is a good time to buy, so he doesn’t have any interested buyers. This isn’t related to the BMR program. No one wants to buy a condo downtown right now in general. For the Jansuks, selling after 4 years is risky in any scenario, and if they were market rate sellers they’d face the same issue that buyers can’t afford to pay 2018 prices for a home today since interest rates, and the cost of everything else, have gone up significantly. The BMR program doesn’t isolate buyers from the risks of homeownership; it helps people with lower incomes buy into the market like their higher earning neighbors.

  8. I got a BMR a few years ago knowing that I won’t make any money from it when I sell it. And that I would need to live there for 10+ years to be worth it.
    BMRs are not there for people to make money on Real Estate, it’s their for people to have affordable housing and build a little equity while living in the unit.
    For me, I currently get to live a one-bedroom unit by myself. I would need a roommate if I paid market rate. That benefit of having my own place and not needing roommates outweights not making a profit for the home in the future. If
    anything, I should compare the opportunity cost of what I paid vs what I would have paid at market rate to decide if I really lost out on getting a BMR.

  9. I did read the article as best I could. I understand that at the minimum purchase price you also get a great loan from the city. The seller can negotiate a higher price but because the city won’t support these higher prices with loans they will be dealing with people that can afford a bit more. Still a very sweet deal. From my point of view Patel just needs to take the 30,000 and move on. For the others they may need to sit on their investments until they are not underwater. Lots of folks have to make those choices. In all these instances it seems the folks no longer wish to stay in SF. It may be a job or lifestyle change. To me this programs intension is to help folks stay in San Francisco. Not as a short term profit strategy on the way out. Sorry if that seams obtuse but I am pretty done with the fair weather friends of SF.

  10. Thanks for saying what I have been saying for decades. The point of a government program to help first time home buyers is not to keep them impoverished and stuck in their home. The goal should be to allow them to flourish and become independent and the only way to do that is to allow them to realize some profit that at least keeps up with inflation and does not force them to take a loss when paying back the loan. The limited equity worked. The reduced prices do not.

    1. The silent city second is the lever. BMR resident are not traditional homeowners. They can’t take out 2nd mortgages on equity. Doing home improvements on the BMR is folly. Its not transitional housing, It’s glorified Section 8 housing. In a mixed income development

  11. Are the original contracts from lets say 1999 still in effect, or is every BMR owner required to use the affordable housing widget, if they want to sell. Asking for a friend

  12. Getting a house subsidized so that you can stay in San Francisco as a valued community member makes sense. When you no longer need this as you life has been enhanced and changed does not give you rights to great profit. If you rent and move of your own free will you leave with no profit. If you stay you get the advantage of a stable cost. I don’t feel any bit sorry for these folks. Move on and let the next person benefit from some security until their next chapter.

    1. That is not the point or intention of the BMR program. It is intended to help people have the duties and advantages of homeownership and the financial advantages are already capped.

    2. Jane,
      It does not seem like you read the article well. The issue is not about making ‘great profit’ (your words). The issue is a change in the program to wear they are unable to sell EVEN and the cost they paid because some new foolhardy city formula has changed the value of their house. If they don’t accept that lowball offer, then folks buying can’t get the city-loan.
      This is just another failure by the City government (and Breed) whereas if you grease a bit at DBI then magic can happen.

    3. You did not read the whole column or are rather obtuse. The point is people have figured out this is just not just a bad idea for the community, but a bad idea for individuals in the community too. The downside is too huge and there is literally no upside at all. No one wants to buy these actually city controlled and ill-conceived con games anymore.

    4. cool. I bet these people would love to “not profit.”

      Nice of you to be on the banks side, so they profit and no one else. Not the city, not the buyers, not the sellers.

    5. Read the article more closely. These people will lose money they do not have if they try to sell, due to a very poorly designed city program. But yeah, you have no sympathy.

  13. Back 2016, i though i was ready to buy my first home and looked at 2br bmr’s. I found the application complicated tiring and was just to apply for a unit that i am interested in. Plus there’s the lottery consisting of 100+ potential buyers. The limited banks that you can go to. The high HOA. In 2019, i bought a 3br house in Vallejo for 400k before the pandemic. Reasonable $90 HOA. My own garage, washer/drye, a backyard. Sure its a treck but in the end it was the best decision i made. I can sell tomorrow and profit if i want to.

  14. In summary, some guy in Ireland keeps a BMR in SF vacant feels it’s unfair that he’s “stuck with” just $30k in unearned profits, on top of the massive subsidy that was slathered upon this fool for 14 years?

    Just making sure I understand.

    1. “Unearned profits” …. you mean like the unearned privileges every subsidized buyer or renter in San Francisco gets? They did nothing to earn anything, but won a government sweepstakes contest. I keep hearing how not having property keeps POC’s from building generational wealth. I guess you think they should not have access to that kind of financial power either.

      1. Yes, to be perfectly clear, I’ve written extensively on this topic and the whole notion of building generational wealth or any other kind of wealth simply from buying and holding a house is fundamentally flawed. It should be policy at every level of government to ensure that houses decline in real-dollar value at all times.

        For a family to “build generational wealth” by buying and holding housing assets means that some other family had to lose. It’s morally wrong, and any politician who says this is the way to give a helping hand to people of color is a con man.

        1. So everyone should live in a tent in your fantasy world? LOL! How “moral” of you. Remember even God needs money, as every religion begs for it. Why even leftists beg for money. Not money they actually earn, but taxes to claim money they did not earn, from the people who did earn it.

    2. No. You don’t understand.

      He isn’t trying to keep unearned profit. Or any profit at all. He is trying to avoid a capital loss. The city has arranged it so he can only sell it for less than he paid for it.

      1. That’s not what the article says. It says that the lower “affordable” price is $30k higher than he paid in 2008.

        1. That’s in nominal dollars. After adjusting for inflation over 14 years, it’s very definitely a loss in real dollars.

      1. I read the article twice, and am still confused, and I’m very interested because I own one of these things!

    3. Earlier in the article it’s pointed out that he owes more money to the bank than the sales price.

      Earned or not, that is a “profit” of -$25,000. Well, it is a profit to the bank.

  15. This article portrays a pretty grim situation.
    Yet another chapter to add to the “The Worst-Run City in the U.S.”
    And yet Prop E will pass – as mandated by our leaders and supported by agit-prop “voting guides”.
    And down, down, down this rabbit hole we’ll sink.

    It’s quite difficult not to be cynical about any of the the SF Propositions or State Ballot Measures.
    There always seems to be some unintended consequence or unworkable dynamic that just adds to the cost of government and increases the level of corruption.
    Or delivers to bad actors (think Uber or the current DraftKings/FanDuel prop 27 scam) the goods they swindled.

  16. I guess they are being asked to sell for less than they purchased at.

    I just wrote the housing office, with a link to this article, asking what the minimum price for my place would be. If it were less than what I paid, I’ll be frustrated.

    Thanks for this article, might light a fire under someone to get things rectified.

    People keep writing about making more BMRs and I keep seeing, there are a lot available now no one is purchasing, so BMRs don’t seem to be the solution. Regular affordable housing seem like a better idea.

    It is sad when the streets are filled with people who need a place to live, there isn’t more and better programs going.

    I believe that’s thanks to the power of the real estate industry in California…sad state. I’d like to move out of here just for that. Who wants to live in such a cruel society?

    1. Well, I do for one. Try being LGBT, black, or female in most of the “affordable” states. Civil rights don’t come with a price tag to make it easy to understand their value but a decade in a right-wing state with low income taxes will open your eyes.

      1. Hope you found a place, then. I’m not moving to a red state either. San Francisco is a pretty conservative place, and has gotten even more so with the tech invasion. I guess it’s better than some places, but very far from ideal with their history of displacing Blacks.

        The building I live in now has all sorts of bad interactions between people due to race, and social status…major verbal arguments. So every place is fraught these days.

        If you plan on staying for the long haul, you can purchase some pretty amazing places right now and it’s a good deal.

        If indeed City & County is giving a low ball price to condos that is lower than what they cost originally. That’s ludicrous, and should be investigated and rectified.

  17. This is so confusing! Nature of the beast.

    I own a BMR and I believe if I sold at the amount I bought it at in 2016 I would get the $25,000 equity I now have out of the place.

    Wasn’t that the expectation when buying these places?

    When people say they’ll loose money, why is that?

    Seems like they are loosing more money by not selling at the lowest price, taking the equity they have, and letting it go at that.

    The idea of the BMRs was to allow you to have affordable housing. My Mortgage + HOA fees right now is less than a rental and I’m building equity. So if I sell at the same price, I’ve gotten more than I would if I rented.

  18. I qualify for the program and have viewed several BMR units, but the HOA fees are ridiculously high. The Mint Plaza unit would be perfect for me, but the $773 per month HOA fee doesn’t make it an attractive option.

    1. All these Government housing programs just make slaves out of the poor people suckered into them and make staying out of servitude to the Government bureaucrats even more expensive for those who want to remain independent of excessive Government control, since this nonsense is financed by extra costs on fair market rate housing. What are the actual results of these programs? The housing situation in San Francisco is worse than ever, so this has fixed nothing, as is normal in San Francisco. It just gets worse and worse. Social control is very toxic, look at how it’s strangling China now.

    2. The HOA’s are not subsidized, sorry, you have to pay your full freight, no one else is going to pay it for you.

      1. Uh. Actually they are subsidized. My place would have cost 500K more than I paid for it. Out of reach for me then and now.

  19. Very interesting. Thanks for the detailed reporting on this. I had no idea. SF is the land of good intentions, unforeseen consequences, and minimal competence.

    Just thinking that in Patel’s case, he should rent his unit out at market rates. That goes against the BMR rules, but what’s the worst that they could do? Take the unit? The City is pretty weak on enforcement in general. Could be years before anything happens.

  20. Great reporting Joe. A really terrible outcome for these owners, but unfortunately, not surprising. The reality is that interest rates have more than doubled in the last 15 months. Since the city looks at what’s “affordable” — with a 3% loan 15 months ago, the monthly payment on a $420,000 loan is about the same as the monthly payment today on a $270,000 loan at 7%.

    I looked into the BMR program for a friend about 10 years ago and my advice was RUN! The issue I saw back then is that your upside is capped by the program, unlike a normal purchase where you have uncapped upside potential. Of course in both cases, you have downside risk which is what these owners are feeling. But you are hamstrung by not being able to rent the unit or sell to whoever you want to — that inflexibility adds huge risks.

    Patel’s case shows the problem with these types of inflexible programs. If he had bought a normal unit and the market is down as it is right now, he could just rent it out — probably at a profit and wait until the market comes back.
    The Jansuks are what I would call a short term hold — quite honestly, just about anyone who bought in the last 5 years and wants to sell today is going to be selling at a loss.

    Real advice: Don’t buy a place unless you want to own it for 10 years. Don’t get involved with complex BMR programs. Figure out what you can afford on a first time home buyer FHA loan with 3% down — and go with that (or VA loan if you were in the military). The risk/reward profile of buying a BMR unit is not good.

    1. I bought a beautiful one bedroom unit in lower Nob Hill (with windows on 3 sides, even the bathroom) for 190K in 2011. I rent it now, under market for $2,300, because it’s my property, not the cities (unless I don’t pay the property taxes) unlike the below market scam, that is never really your property. Sorry Mr. Patel got suckered by the city, when he really did not have too. Never trust the city, they are thoroughly corrupt.

      1. Good for you! I say so sincerely. Real Estate is an asset that always has to be treated as such. What you did others could do as well. IF you want things like equity, profit, etc than you have to consider options like renting…

  21. My wife and I purchased a BMR in 2010 and were required to take an informative class about the BMR program with MEDA. During this session we were informed that equity was capped, but we were also told that it would never sell at a price lower than what was initially paid. We have no intention of selling now or in the foreseeable future. This article is very eye opening. I feel like the MOH should be able to address this issue and provide relief. I think Supervisor Myrna Melgar makes a great point stating “What they are doing is ensuring these units are affordable — but instead of doing it on the public dime, they are doing it at the expense of the family who is selling.”

  22. There’s another factor in this, too: the HOA fees. I looked at Patel’s unit online, and then saw that the HOA fees were a whopping $775 a month. For what? A lovely array of building amenities? Nope — there’s a tiny gym and there’s a roof deck. That’s it. There isn’t even parking.

  23. All of these Rube Goldberg contraptions that gird market forces, poorly, afford crappy trade offs, should be dispensed with, and replaced with government built permanently affordable social housing.

    1. Correction:

      All of these Rube Goldberg contraptions that subvert market forces, poorly, force crappy trade offs, should be dispensed with, and replaced with privately-built naturally affordable housing for the greatest number of people.

      Historic supports this approach as its’ what we did quite successfully in SF (and throughout the entire state of CA) between the end of WW2 and the 70’s — prior to the implementation of NIMBY-driven, I’ve-got-mine-so-screw-everybody-else, anti-housing policies — which has directly resulted in our present chronic housing shortage, environmental degradation, displacement and runaway housing costs.

      The surest way to gentrify a economically, socially and culturally desirable place is to NOT build adequate amounts of housing relative to demand.