I live in the Bay Area. That’s San Francisco, Oakland, San Jose, Berkeley and more! The housing crisis out here is only rivaled by New York City, with median rents for two-bedroom apartments hovering around $5,000, and the median home value in San Francisco up 67 percent since 2011, at $1.13 million. As with every other major city in the world right now, affordable housing is diminishing because of increasing income inequality. The Bay Area has that in spades, as tech money, and prospective tech money is centralized here. Of course, much of the money that being made out here exists in stock options, and putting a down payment, frequently around 20 percent, can be daunting even for those doing pretty well.
It turns out that even the well-off need help in a housing market as crazy as the one in the San Francisco Bay area, and lenders are elbowing each other in a rush to provide it.
They’re courting Silicon Valley workers with tailored loans, guaranteed 24-hour approval and financial-planning services. Social Finance Inc. has deals with Google and other top technology companies that allow it to market to new hires. First Republic Bank -- which gave Facebook Inc. billionaire Mark Zuckerberg a 1.05 percent interest-rate mortgage -- has opened branches in Facebook and Twitter Inc. headquarters. San Francisco Federal Credit Union will finance 100 percent of houses costing up to $2 million.
That sounds fair. It also sounds super safe. I can’t remember the last time giving out high-risk loans to people in order to buy housing in a hysterically increasing housing market blew up in anybody’s face?
For many, it’s not home values that keep them in rentals but alarming down payments, which can be more than the cost of the average U.S. house: $187,000. That’s where San Francisco Federal Credit Union comes in. It started offering zero-down loans in December to people who work in San Francisco or San Mateo County. The credit union has more than $100 million pre-approved for 30-year adjustable-rate mortgages in what’s called the Proud Ownership Purchase Program for You.
As the tech boom starts to show signs of cracks, there’s some concern that high loan-to-value mortgages are dangerous. Silicon Valley venture-capital funding fell 20 percent in the second quarter from a year earlier, according to a report by PricewaterhouseCoopers and the National Venture Capital Association. New companies are staying private longer, leaving fewer options for shareholders to cash out.
Meanwhile, people are crossing their fingers that their rent-controlled apartments hold up in a market that continues to do away with tenant rights. I say “crossing their fingers” because even nuns are getting 50 percent rent hikes and it wasn’t God trying to save them. San Francisco Federal Credit Union says they reject 40 percent of the applications for zero-down loans. Can you hear that? That’s the sound of me counting to ten, while trying to take long breaths.