Establishing better first-time home buyer assistance programs is necessary for our workforce to purchase homes in Sonoma Valley, where the median home price for the Sonoma (96457 zip code area) is currently $999,654 (Zillow, Aug 2024). The table below has examples of people who need help to buy a home of any size here (data from salary.com). These are our essential workers and our fellow community members.
Table 1: Examples of Essential Workers in Sonoma Valley at Various AMI Levels
| Income Category | 1 person household | 2 person household | 4 person household |
|---|---|---|---|
| Extremely Low Income (30% AMI) | Full-time Minimum Wager Earner | Couple on Social Security | Housekeeper, single parent |
| Very Low Income (50% AMI) | Nursing Aide | Childcare Worker, single parent | Home Health Aide, full-time, single parent |
| Low Income (80% AMI) | Administrative Assistant | Security Guard & Food Preparer | Police Officer with stay-at-home parent, 2 children |
| Moderate Income (120% AMI) | Registered Nurse | Fire Fighter & Receptionist | Two Teachers, 2 children | Above Moderate (140% AMI | Non-profit Executive Director | City Building Official & part-time worker | In-store Pharmacist & employee of small business, 2 children |
The four existing programs are detailed in the table below.
| Program | Status | Administrator | Partnership | Limits |
|---|---|---|---|---|
| Cal Home | Existing program | California Housing & Community Development/Homeownership Super NOFA | SoCo Community Development Commission (SoCo CDC); Non-profit developers; City of Sonoma | Very Low and Low Income (50-80% AMI |
| HAC First Time Home Buyer Program | Existing program | SoCo CDC | SoCo CDC | Limited to Sonoma County Employees |
| ReCoverCA HBA | Existing program | Golden State Finance Authority (GSFA) | SoCo CDC | Low and Moderate Income (80-120% AMI); Only homeowners who lost a home in 2020 Sonoma Fire Up to 350,000.00 |
| GFSA Platinum Downpayment Assistance | Existing program | GSFA | SoCo CDC | Up to 5.5% of first mortgage amount. Not limited to first time buyer | GFSA Golden Opportunities Downpayment Assistance | Existing program | GSFA | SoCo CDC | Up to 5% of first mortgage amount. Not limited to first time buyer |
These existing programs are either very restrictive with regard to who may apply (for example, a county employee or homeowner who lost a home in the 2020 Sonoma fire) or provide very limited funding (for example, less than $100,000).
The only first time home buyer loan program administered by Sonoma County is the HAC First Time Home Buyer Program, which is restricted to eligible County employees as a below-market-rate interest second mortgage. For the homebuyer programs administered by Golden State Finance Authority (GSFA.org), either eligibility is very limited or the funding is extremely limited. Therefore, very few home buyers are served by these programs.
What is needed is to create additional programs that would fund up to 20 or 30% of the cost of a home for moderate and above moderate AMI first-time home-buyers. The programs proposed here are based on programs offered through a public-private partnership between Santa Clara County and the Housing Trust of Silicon Valley (HTSV.org). These programs could be delivered in Sonoma Valley.
| Program | Status | Administrator | Partnership | Income Limits |
|---|---|---|---|---|
| Empowerment Homeowners Program | NEW: Does not yet exist in Sonoma County | Housing Trust of Silicon Valley (HTSV) | SoCo CDC? | assume Moderate Income (120% AMI) |
| Homeowner Empowerment Loan Program (HELP) | NEW: Does not yet exist in Sonoma County | HTSV | ScCo CDC? | assume Moderate and Above Moderate (140% AMI) |
As part of the loan qualifications for these proposed programs, geographic live and work eligibility boundaries would be created, such as Sonoma County Supervisorial District 1 or the Sonoma Valley Unified School District.
Typically, these loans require a contribution by the home buyer (3-10% of the downpayment) and the loans are repaid with a percentage of the equity upon sale of the home. These types of requirements are common in first time home buyer programs (e.g. Santa Clara, Alameda, and Placer County programs and Housing Trust of Silicon Valley).
To assure that historically underserved groups have access to homeownership, these programs should include a navigation and education component. Access to these programs should be easy and clear to community members. Providing help such as one on one support throughout the process will ensure applicants understand the programs’ steps and requirements. Strong outreach is needed to effectively inform the intended community members about these programs. Outreach should be done via known and trusted community-serving organizations in Sonoma Valley.
To be successful, the programs require:
Funding from dedicated funding sources (e.g. bonds, grants or settlements) and funds for labor-intensive administrative and underwriting expenses. This is the most significant potential limitation. The Santa Clara program was funded with a $25M bond.
Resources for marketing and education, including external communication to stakeholders including realtors, potential buyers, local loan officers, non-profit developers, and employers. A communication strategy that is far-reaching and ongoing is needed to ensure participation.
Assessment and scoping of the program by Sonoma County to ensure feasibility (i.e. housing stock and affordability):
Real Estate Market: Review the past 6 months activity for listing and sold properties broken up into 1-3 purchase price ranges based on the results of the affordability calculations and
Affordability Calculation of PITI (principal, interest, taxes, insurance): factoring varying purchase prices and program down payment scenarios. Establish minimum borrower contribution, use proposed AMI level maximum income with 2- & 4-person household for qualification. Estimate required income needed to qualify.