SHRA grant program wants to improve diversity among Sacramento homebuyers. Why it’s not working

In March, the Sacramento Housing and Redevelopment Agency launched a new program designed to help more low-income families and people of color buy their first home.

Called the Community Homeownership Initiative, SHRA would shepherd families through the homebuying process, partnering with local real estate agents and banks. After finding a home, participants could receive up to $22,000 in grants to cover closing and down payment costs from the Federal Home Loan Bank of San Francisco as part of its longstanding WISH program.

Six months later, the program has had little success in actually helping Sacramento families buy a home. As of August, of the 17 families in Sacramento who have been pre-approved to receive WISH grants, none has received them.

Why? Because no one can find a home in their budget.

Sacramento’s white-hot housing market during the pandemic — fueled by record-low mortgage rates, work-from-home flexibility and an influx of wealthy cash buyers — has become increasingly impenetrable for low- and moderate-income families. Where once the median home price in Sacramento County was around $300,000 just five years ago, now the median home price is more than $483,000.

“It’s very broken and very frustrating, not only for me but ten times over for those trying to find a home,” said SHRA deputy executive director Tyrone Williams. “We don’t control the real estate market, but those are very disappointing numbers if at this point no one’s gotten a home.”

To qualify for the WISH funding, a family of four in Sacramento has to make 80% of the 2020 area median income, or less than $69,000. But “at 80% AMI income, you really can’t compete well in the market,” Williams said.

Williams said the program’s results thus far reflects a disconnect: Good faith efforts by local government agencies, nonprofits and banks to address the income and racial inequities in homeownership are facing the realities of a volatile housing market where there are not enough homes, and let alone affordable ones.

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Low- and middle-income homebuyers are consistently finding themselves outbid on homes by San Francisco and Los Angeles buyers who come in significantly over asking price or with cash offers, said Tanisha Broadway, president of the Sacramento Realist Association, which has been involved with SHRA’s community homeownership initiative.

“It’s way too competitive for someone who has traditional financing,” she said.

Buying and owning a home is a key way of building wealth, Broadway said. A 2020 U.S. Census Bureau report on household wealth showed that households that owned their home had a median wealth nearly 87 times larger than those that rented. Even when excluding home equity from total wealth, the median wealth of homeowners was nearly 36 times greater than renters.

But in the city of Sacramento, about 44% of nonwhite households owned their home, according to Construction Coverage analysis of housing from the U.S. Census Bureau, compared to about 55% of white households. Homeownership rates are particularly low among Black and Hispanic residents, about 31% and 41%, respectively.

Since FHLBank San Francisco began its WISH program — part of its federal mandate to set aside 10% of net profits toward building affordable homes and supporting first-time homebuyers — in 2003, about $4 million in grants have been dispersed to Sacramento residents to buy nearly 300 homes.

But community investment officer Marietta Núñez acknowledged that it’s becoming increasingly difficult to support qualifying families in expensive metros in California, who may have to save up more, find additional financial assistance, and continue shopping for months on end.

This year, about $11.5 million in WISH funding is available to potential homebuyers across its member banks in California, Nevada and Arizona, Núñez said, its largest allocation ever.

Nunez declined to state how much of that money has been dispersed thus far, but confirmed that it is much easier for low- and moderate-income families to find homes and secure WISH grants in Nevada and Arizona.

“Unfortunately we don’t do as much WISH as we’d like to do in high-cost areas,” Núñez said.

Because the WISH program runs annually, if someone’s already qualified this year, Núñez said they may still be eligible to receive grants next year if and when they do close on a home.

“We never leave a homebuyer behind,” Núñez said. “There’s always next year.”