Beacon Economics most recent Employment Report for California (based on the May 18th release from EDD) is very positive on the job-growth trend, especially in private sector employment, where 219,000 jobs have been created in the past year (April 2011-April 2012), helping to offset a loss of 43,000 government jobs, of which more than 70% were from local governments. While the numbers in April 2012 were not great, the follow significant upward adjustments from initial estimates (February numbers were adjusted from 4,000 jobs gained to 38,000 jobs gained, e.g.). Statewide, the unemployment rate continued to drop, to 10.9%, from 11.0% in March.
In this morning’s Los Angeles Times Alejandro Lazo reported on a just-released analysis done by Zillow, the on-line home value estimator, that pegged the percentage of homes with negative equity (or underwater mortgages) at 30% in Los Angeles County, up from 28.6% in the 4th quarter of 2011. The analysis, done with data from Zillow (home values, from their database) and TransUnion (mortgage balances), is available here, and an interactive mapping tool can be found here.
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
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
In March I posted a chart that showed how severe a shift has occurred since 2005 in the funding sources for 9% tax credit developments. Tax credit equity has decreased by one-third and public agency soft loans have doubled as a share of total development costs (TDC). CTCAC released its 2011 Annual Report last month, and the trend has continued. While the average TDC for the 121 awarded projects fell by 4.2% from 2010 to 2011, tax credit equity and public agency soft loans both declined less than 1% – the major decline was in commercial loans, and there was some new funding from “Tranche B” loans, backed by Section 8 rental subsidies.
% TDC 2005 2006 2007 2008 2009 2010 2011
Soft Loans 17.8% 14.7% 16.4% 21.2% 29.2% 39.8% 38.1%
TC Equity 67.5% 68.7% 64.2% 57.1% 50.5% 47.3% 46.7%
The chart above clearly shows the continuing trend, which will probably be evident through 2012 as well. The table above shows the percentage of TDC that soft loans and equity covered over the past seven years and how pronounced the trend toward public agency loans has been – more than doubling from 2007 to 2010! Read more
Two of Century’s largest clients, Meta Housing and AMCAL Multi-Housing, are featured in an article about mixed-income housing in the March/April 2012 issue of Urban Land. The author, Patricia Kirk, highlights several public-private ventures in Portland (OR), Austin, and especially Southern California, where public agencies financial assistance made vibrant communities with a range of income levels possible.
When the Housing Bubble popped, and home sales and prices started dropping like a stone, Congress enacted the American Recovery and Reinvestment Act of 2009 (ARRA), a stimulus package to try to stem the growing recession. A big part of ARRA was a first-time homebuyers tax credit. This gave people buying their first home, or who had not been homeowners for three years, with a tax credit equal to 10 percent of the purchase price of the home, up to $8,000. Because California’s home prices are so much higher than those in other regions, the $8,000 cap was reached by almost all homebuyers here.
The tax credit was intended to spur home buying and stop the precipitous drop in home prices, which were plunging at almost 20 percent per year at the time. According to a report by the Government Accountability Office (GAO), about 2.3 million taxpayers took advantage of the credit, which cost $16.2 billion in direct tax expenditures.
So, what was the real effect? Did the credit do what Congress intended? And who really benefitted from that $16.2 billion? Read more
Everyone is familiar with the collapse of the Housing Bubble, even if we don’t all agree on what caused it. There seems to be a consensus that, like an alcoholic, the Housing Market will not begin to recover until it hits bottom and takes responsibility for its own future, instead of manipulating and cajoling others to support it. And most people realize that the Housing Market has not yet hit bottom–even though no one seems to know how far down the bottom really is. In California, the Housing Market has only fallen back to 2003 price levels, which were considered too high then.
When the Housing Market was higher than a kite, everyone was saying that the laws of economics were out of kilter, that housing was too expensive and regular working folk couldn’t afford to buy or even rent a place to live that was within their ability to pay.
Here in California the Housing Market was considered so far out of balance that, in 2002 and 2006, the voters approved Housing Bonds totaling $4 billion to pay for homeless shelters, affordable apartments, and to subsidize first-time homebuyers.
Today, many people are saying that housing is too cheap, despite all evidence to the contrary (more on that another time). Public agencies at all levels, financial institutions and the real estate industry are doing everything they can to enable the Housing Market to get high again. And they have come up with a remarkable tool to do that. Read more
The dissolution of California’s redevelopment agencies has caused great consternation about how apartment developments that are deeply affordable will get financed, as RDA’s annually contributed several hundred million dollars to create or preserve several thousand affordable apartments. CTCAC reported that in 2011 in the competitive 9% LIHTC rounds, 63 of 101 (62%) awarded projects included RDA financing. With those funds no longer available, how much will development decline in 2012 and 2013? The average RDA loan was $5.8 million, 32% of the total cost of a development in 2011 – how can a project happen with 1/3 of its funding is goes missing?
MoveLA held their 4th Annual Transportation Conversation last week, and, as usual, it was filled with golden nuggets of knowledge delivered by the wise men and women who work in the fields of transportation, urban development and housing.
One of the themes was the need to link new transit with the businesses, workers and residents of the communities being served by LA’s growing fixed guideway public transportation system. It is recognized that transit location has an effect on property values and development patterns.* (See the post Getting Ahead of the TOD Train in this blog for some examples of how Century has worked with developers in this arena.) There was some discussion on how LA can accelerate its transit construction program and how best to plan for the kinds of development that will optimize the use of the transit and benefit the community, without leading to gentrification.† We will be talking more about some of those ideas in the coming weeks and months. Read more
Century Housing finances affordable housing developments throughout California. From acquisition loans to bridge and construction loans, Century has worked for more than 20 years to provide tax-credit developers and infill developers with innovative loan solutions and responsive service.