What's next for Housing Prices?

PMI Mortgage Insurance Company, one of the largest residential mortgage insurers in the country, has just released their quarterly forecast of future home prices. Their forecast is closely watched by Wall Street and the lending industry. The forecast has typically been very accurate, particularly during down markets.

The forecast--which looks at all 381 U.S. metropolitan areas--is incredibly bearish about home prices over the next 24 months. For the Stockton-Manteca-Tracy-Lodi metro area, they believe that there is a 99.9% chance that prices will be lower in 2011 than they are right now! On the bright side, we are not alone, they include about 40 other metro areas in the 99.9% category. Additionally, 98% of the housing markets in the country became more affordable over the past year. Overall, due to low interest rates and dropping home prices, homes are 33% more affordable than 1995, when they first established the affordability index.

The most stable housing markets over the next two years include Cleveland, Columbus, Pittsburgh and San Antonio. The forecast believes there is only a 3% chance of prices dropping in the next two years in these areas. However, the overall U.S. forecast is dim as they predict lower prices in 324 of 381 U.S. housing markets.

This is certainly not good news for our future revenue forecasts. We received our property tax numbers, and they came in just about where we expected. Manteca's assessed value dropped a total of 14.7% this past year (we forecast 15%). If home prices continue to fall, we'll likely need to reduce our revenue forecasts again in 2010-2011.

To read the full report, click here, Bloomberg's take here and if you want to see the detailed report, click here.

Neighborhood Stabilization Program - Upcoming Meetings

In Wednesday's post, I mentioned that the City has received funding for the purchase and rehab of foreclosed homes. Two press releases were issued today regarding this program. One press release is targeted to residents interested in purchasing a home and the second release is for local licensed contractors and realtors:

NEWS BRIEF
YOUR OPPORTUNITY NOW!

YOUR OWN HOME
Neighborhood Stabilization Program
MANTECA HOMEBUYERS WORKSHOPS
TWO DATES AVAILABLE

Potential homebuyers can choose from two dates for the Neighborhood Stabilization Homebuyers Workshop. They will be held on Wednesday, April 22 and Wednesday, April 29, 7pm, at the Manteca City Council Chambers, 1001 West Center Street, Manteca. Visionary Home Builders will lead both workshops for those interested in obtaining information on purchasing a home through ‘Your Own Home” Neighborhood Stabilization Program (NSP).

San Joaquin County has received approximately $9 million in allocated funds from the U.S. Department of Housing and Urban Development as part of the Federal Stimulus Package. It will be used, in part, to purchase and repair vacant, foreclosed homes that will be available for purchase by eligible, low to moderate income, buyers.

Wednesday, April 22, 2009
or
Wednesday, April 29, 2009
7:00 – 8:00
Manteca City Council Chambers
1001 West Center Street
Manteca CA 95337

For information call: 209-466-6811 or http://www.visionaryhomebuilders.org/

-AND-

NEWS BRIEF

CALIFORNIA LICENSED SUBCONTRACTORS
AND REALTORS WORKING IN THE
MANTECA AREA

Informational meetings are being held Friday, April 24, for California Licensed Subcontractors and Realtors to obtain specifications on the bidding process for jobs through the Neighborhood Stabilization Program (NSP). Meetings are being led by Visionary Home Builders of California.

Manteca is receiving a portion of the $9 million allocated from the U.S. Department of Housing and Urban Development, as part of the Federal Stimulus Funds, for the purchase and repair of vacant, foreclosed residences in San Joaquin County.

Friday, April 24, 2009
Manteca City Council Chambers
1001 West Center Street
Manteca, CA 95337

Sub Contractors:
9:00am to 10:00am

Realtors
10:00am to 11:30am

For information call: 209-466-6811 or http://www.visionaryhomebuilders.org/

2009 Housing Element

In today’s Bulletin a letter was published questioning the need for a housing element update.

The author is concerned with the cost of updating the City's existing Housing Element, and asks "why not simply implement the findings of the 2003 Housing Element and save our limited funds?" The answer is simple, State law requires the Housing Element to be updated every five years and Manteca's Housing Element was adopted in August 2004. Such updates are necessary to account for changes in demographics, housing program funding and site availability. The mandatory update also requires evaluation of the existing housing element to gauge the City's performance in meeting its established goals. The update also gives City's an opportunity to bring their housing elements into compliance with the most recent housing legislation.

Since the adoption of our last housing element the state legislature has approved new requirements for housing elements, including:
· SB 2-Requires zoning to encourage and facilitate emergency shelters and transitional and supportive housing. Specifically, at least one zoning district in each community must be identified where emergency shelters are allowed without a conditional use permit.
· SB 2348- Requires a more detailed inventory of sites, and requires that each community zone enough land at 20 units per acre to accommodate its low- and very low-income housing needs.
· SB575- Limits the downzoning or denial of projects identified in a Housing Element Adequate Sites Analysis.
· SB 1087- Requires housing elements be forwarded to water and sewer providers to ensure that infrastructure is available to meet future housing needs.
· AB 2634- Housing Element must quantify the needs of extremely low-income households.

Obviously the question becomes "What happens if we do not have an updated Housing Element?" Without a certified Housing Element, the City would be ineligible for some of the state housing grants and funds it currently receives. Other state funds, including those used to maintain roads and utilities, also could be jeopardized. The City would also be vulnerable to lawsuits for not working proactively to meet its housing needs. Typical remedies for such lawsuits include court orders to meet state certification requirements and, in some cases, court ordered moratoriums on development. These lawsuits are expensive and can have adverse fiscal and economic effects.

The Community Development Department is working diligently to craft a Housing Element that comes to grips with current and future housing needs including housing related to the foreclosure crisis, incentives for residential developers to provide affordable housing, working closely with non-profit developers, and working to promote higher density housing in the downtown.