Clean Air, Green Jobs – – and Affordable Housing?

Governor Brown signed two bills which will provide direction as Cap and Trade revenue investment decisions are made in coming years.  SB 535 (State Senator Kevin de León) and AB 1532 (Assembly Speaker John Pérez) create a framework for the state’s investment strategy for the funds which will be generated under the terms of California’s Global Warming Solutions Act (AB 32).  SB 535 requires that a minimum of 10% of the investments of from the Greenhouse Gas Reduction Fund be targeted to identified neighborhoods, with one-quarter of the investment required to demonstrate a benefit to those communities.

AB 1532, creates the Greenhouse Gas Reduction Fund to hold the revenues from the Cap and Trade auction, and sets up a public process for development of investment plans, hearings, annual reporting and active oversight of the expenditure of those revenues.  AB 1532 specifies 7 categories of investment for the Greenhouse Gas Reduction Fund, among them, “sustainable infrastructure projects, including transportation and housing.”  With estimates of first year revenues in the $1 billion range, having access to this capital should be good news for housing developers, especially those who depend on subsides to produce below market rate housing, in light of the loss of redevelopment funding and exhaustion of the Housing Bond funds from Propositions 46 (2002) and 1C (2006).

But, will housing developers really get access to that capital in meaningful ways, or will the funds be invested in other activities?  And should the funds be invested in housing, instead of other areas which would result in greater reduction in greenhouse gas emissions? Read more

Has the Granny Flat Finally Arrived — as the Graduate Flat?

Lennar, a well-known and fairly traditional home builder active in California, made the news recently because they are offering a new product in their Crescent Heights at Sky Ranch subdivision in Santee, a suburban city east of San Diego.  One of the three models offered incorporates what they are calling their NextGen, Home Within a Home.  Essentially, this is a studio apartment, with a separate one-car garage, included within the same structure as a fairly standard 4-bedroom (plus ‘Bonus Room’), 3-bath, 2-car garage suburban home.  The studio unit has its own separate entrance from the outside, kitchenette and space for a stacked washer and dryer.

The home is priced at $610,000, and has about 3,650 sq.ft. in total, or about $167/sq.ft.  For the San Diego market, it is in about the middle of the price range.

Is there a market for this “new” type of home?  Lennar seems to think so, and the national press has been talking about the demand for multigenerational housing for some time.  CNN Money wrote about it in April 2012, a year ago, the New York Times pointed out that it was a new trend a year before that, a recently published book, Together Again, notes articles going back to at least 2005 on their promotional website, AARP has a whole blog site dedicated to the issue.  It has been discussed in various “learned journals” (I happen to like the article in New Geography). Read more

Is There a Two-tiered Mortgage Market Based on Race?

Red-lining has long been a topic of concern in the housing industry.  I have known people who actually saw the maps in bank offices, with the big red line surrounding minority neighborhoods on it, or the predominantly minority Census Tracts colored red.

Red-lining was a very real and pervasive problem until Congress stepped in with the Home Mortgage Disclosure Act (HMDA) and the Community Reinvestment Act (CRA), and bank regulators began to impose sanctions on mortgage lenders who demonstrated bias in their lending practices.

No doubt, there are still banks and mortgage brokers who have not gotten the message, and there is still bias in out society, in home mortgages as well as other areas.  But I was surprised to see the news articles about a recent study that seemed to show that not only was racial bias still practiced, but that Black and Latino borrowers were being broadly discriminated against in major American cities.  This study, produced by the California Reinvestment Coalition (CRC), Empire Justice Center, Massachusetts Affordable Housing Alliance (MAHA), Neighborhood Economic Development Advocacy Project (NEDAP), Ohio Fair Lending Coalition, Reinvestment Partners, and Woodstock Institute, reviewed HMDA data for 2010 and compared conventional and government-backed prime mortgage lending in seven cities, based on borrowers’ race and ethnicity, and the racial and ethnic composition of neighborhoods.

Then I read the report itself.   Read more

Is Preserving Housing Affordability Still a Priority?

The latest figures from the California Housing Partnership Corp. indicate that there are over 50,000 apartments in the state at high or very high risk of converting from their current subsidized rent levels to market rents.  This dwarfs the ability of the housing community and public agencies to develop new housing, and loss of this housing stock would be catastrophic to the residents, who would be forced to move into fewer and fewer affordable units.  Extending the affordability of this rental housing stock must be a part of any effort to assure that lower income Californians have a place to live and raise their families.

So I read a recent article in Affordable Housing Finance entitled Housing At Risk with considerable interest.  The article outlines how three policy changes will affect the ability to preserve the affordability of the 800,000 units in the nation facing possible loss of affordability. Read more

Is now the time to buy? Redux.

A recent article in the Wall Street Journal,  reports that a study by Andrew Davidson & Co. shows that  “Home prices and mortgage rates have made monthly mortgage payments lower than at any time in the past decade. But housing isn’t any more affordable than it was five years ago, during the go-go lending days, after factoring in down payment requirements and other financing terms…”

The article goes on to quote the author’s explanation for why the current record-low interest rates and reduced prices are not leading to a home sales bonanza:  “At the peak of the housing bubble, loan payments were the only cost that borrowers had to consider given the ability to take out no-money-down loans. But today, loan payments constitute roughly 50% of the total cost of ownership ‘and are rather modest by historical standards,’ the paper says. ‘This explains why the record-low interest rates do not impress borrowers and do not propel home prices up.’”

On the other hand, on the AirTalk radio show carried by KPCC-FM, a public radio affiliate, two “experts” reach the opposite conclusionStuart Gabriel, a noted LA area economist and director of the Richard S. Ziman Center for Real Estate at UCLA, and Andrew LePage, an analyst with Dataquick Information Systems, believe that the market has bottomed out and is now trending upward.

I am not convinced.

And now, for something completely different to address to the foreclosure problem.

As prior posts here, and innumerable articles in the media, blogs and other sources, remind us, there is still a serious mortgage default and foreclosure problem, particularly in California.

Enter Mortgage Resolution Partners, who have apparently been shopping a new idea on how to dig out from under this problem.  A story from Reuters says this mortgage firm is proposing that governments use their eminent domain power to condemn, not the homes, but the mortgages.

A big part of the problem with the real estate market is that many borrowers are “upside-down,” or “underwater.”  That is, the home owners have negative equity–they owe more on their mortgage than their home is worth in today’s market.  A recent report estimates that nearly one in three home buyers owe more than their home is worth, and altogether, the difference between the real value of the homes and the mortgages is $1.2 trillion. Read more

Has the Market Hit Bottom? Is Now the Time to Buy?

The news has been filled with conflicting headlines the last few weeks.  On the one hand, the National Association of Realtors® reported that sales in April are “up strongly from a year ago,” but down from March.  And, the California Association of Realtors® reported that “home sales and median price both jumped in April.”  That is great news, because it points to a recovery from the mortgage foreclosure crisis.

Then the headlines told us that the Case-Shiller Index, one of the nation’s leading indicators, showed that home prices have reached their lowest point since the peak in 2006.  And, the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac, reported that mortgage interest rates are still below 4.  That is a lower interest rate than at any other time since 1980, and less than one-half of what it was during the savings and loan crisis at the end of the 1980s, the last time the U.S. experienced a banking and real estate collapse.   Low interest rates make housing more affordable, so buyers are willing to pay more, which usually supports higher prices.  If prices are still dropping while interest rates are at historic lows, then the market must still be in trouble, and not recovering at all.

So where are we really?  Has the housing market bottomed out and started to recover, or are things still headed down to an even deeper bottom?  Read more

Collaborating in the San Joaquin Valley

Hearty congratulations are in order for the San Joaquin Valley Housing Collaborative for the successful inaugural San Joaquin Valley Affordable Housing Summit 2012 held May 22nd in Fresno. The Summit program covered a wide range of issues, especially the depth of the foreclosures and accompanying loss of home values in the Central Valley, but also showed some causes for optimism, as the trends for employments, home values, and opportunities for investment are showing some upticks that can be sustained. Read more

Use the Force … against NIMBYs

In a twist, George Lucas has pledged to develop affordable housing in Marin County in response to NIMBY opposition to his commercial development plans – probably not what the local homeowners expected to hear. In an April 10th letter to the Marin Independent Journal  Skywalker Properties stated that instead of continuing to battle NIMBYs over building film production facilities on their Grady Ranch property (see map here), Lucasfilm would instead look to sell the property to an affordable housing developer because “low income housing … is scarce in Marin.”

Rendering of now-canceled Grady Ranch

Read more

Welcome FHA Changes for Condo Buyers

The Los Angeles Times reported today that the Federal Housing Administration (FHA) is planning significant changes to the rules that currently limit the availability of low-cost FHA insured mortgages for condominium buyers. This will be a welcome change for residential real estate in California, where a major obstacle to homebuyers, especially first-time buyers, is not finding a home to buy, but finding a mortgage to buy it with. With less restrictive standards, condominium prices will stabilize more quickly and the market can move more units out of the “shadow inventory” and into new buyers hands. Such changes will also attract some construction lenders back into the market, as the obstacles to selling the finished condos will be reduced and more predictable. Read more