foreclosures presentation
TRANSCRIPT
Foreclosures and Urban Development in theSan Joaquin Valley
Michael Teitz Blair Schaeffer
2
OutlineThe Issue: Foreclosures and Urban Development
Foreclosures in the San Joaquin Valley
Foreclosures, Housing Production, and Urban Development
Conclusions
3
Is This Housing Downturn Different?
Larger in scale than any seen in recent decades
Foreclosures at a level exceeding anything in recent history
Preceded by financial irregularities larger than any seen in housing since the S&L crisis
Simultaneous collapse of significant parts of the financial sector
For the San Joaquin Valley, some unique factors
4
How Do Foreclosures Affect the SJ Valley?
The SJ Valley is historically a “one-industry” region– Agriculture and services were its economic
foundationFrom 1990 onward, housing production and urban development became major elements of the economy– Spillover from the Bay Area and Los Angeles– Growth of demand for retirement
Local governments have increasingly relied on development fees to balance budgetsThus, vulnerable to a housing downturn
5
OutlineThe Issue: Foreclosures and Urban Development
Foreclosures in the San Joaquin Valley
Foreclosures, Housing Production, and Urban Development
Conclusions
6
Why Study Foreclosures?
Foreclosures are key indicators of housing market health.
Foreclosures have adverse affects on individuals and neighborhoods.
They offer clues to the future of urban development.
7
The San Joaquin Valley
8
Foreclosures in the San Joaquin Valley Have Grown Dramatically…
Foreclosures in the San Joaquin Valley by Month July 1995- May 2008
0
500
1000
1500
2000
2500
3000
3500
4000
Jul-9
5N
ov-9
5M
ar-9
6
Jul-9
6N
ov-9
6
Mar
-97
Jul-9
7N
ov-9
7
Mar
-98
Jul-9
8
Nov
-98
Mar
-99
Jul-9
9
Nov
-99
Mar
-00
Jul-0
0N
ov-0
0M
ar-0
1
Jul-0
1N
ov-0
1
Mar
-02
Jul-0
2N
ov-0
2
Mar
-03
Jul-0
3
Nov
-03
Mar
-04
Jul-0
4
Nov
-04
Mar
-05
Jul-0
5
Nov
-05
Mar
-06
Jul-0
6N
ov-0
6M
ar-0
7
Jul-0
7N
ov-0
7
Mar
-08
Month
Fore
clos
ures
Sources: Rand California; DataQuick
9
…Coinciding with a Huge Increase in Subprime Loans
Subprime Loans by Origination YearSan Joaquin Valley 1999-2007
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Num
ber o
f Sub
prim
e Lo
ans
Foreclosures in the San Joaquin Valley by Year 1999- May 2008
0
2000
4000
6000
8000
10000
12000
14000
16000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Year
Fore
clos
ures
SanJoaquinCountyStanislausCounty
MercedCounty
MaderaCounty
FresnoCounty
KingsCounty
TulareCounty
KernCounty
Source: Loan Performance
10
Foreclosures from 2003 to 2008 Hit Hard in Northern Counties
11
Foreclosures Hit Both Cities and Suburbs…
LegendForeclosed Houses Built 1998 and After
Foreclosed Houses Built Before 1998
_̂ Major Cities
Highway 99
San Joaquin County
San Joaquin CountyForeclosures, 2003-2008
12
…But New Subdivisions Were Hit Hard
13
As a Result Individuals and Families Suffer…■ Home Loss ■ Loss of Home Equity ■ Credit Rating Damage ■ Pain and Shame
Patterson Gardens Subdivision built in 2005
(Patterson, CA)
14
…As do Neighborhoods…■ Decrease in housing prices ■ Home Abandonment ■ Rise in neighborhood crime ■ Blight
Visalia, Ca Merced, CA
15
…And Local Governments and Housing Development.
Elk Grove
16
OutlineThe Issue: Foreclosures and Urban Development
Foreclosures in the San Joaquin Valley
Foreclosures, Housing Production, and Urban Development
Conclusions
17
Foreclosures Affect Urban Development
Weaken housing market Stall Development
Visalia, CA
■
Atwater, CA
18
Major Projects are Derailed
Elk Grove
19
Foreclosures Mirror New Construction…
Comparison of New Single Family Construction and Foreclosures in the San Joaquin Valley 1997-2007
0
0.5
1
1.5
2
2.5
3
3.5
4
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Per
cent
of H
ousi
ng S
tock
(%)
Built by Year
Foreclosed
20
…And Seem Especially Important in the North and South of the Valley
Number of Foreclosures by County January 1997 to May 2008
0
2000
4000
6000
8000
10000
12000
14000
16000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Num
ber o
f For
eclo
sure
s
New Single Family Construction January 1997 to May 2008
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
New
ly B
uilt
Sing
le F
amily
Hou
ses
SanJoaquinCounty
StanislausCounty
MercedCounty
MaderaCounty
FresnoCounty
KingsCounty
TulareCounty
KernCounty
21
California’s Housing Cycle May Have Changed
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Year
Sing
le F
amily
Res
iden
tial U
nits
California SF Housing Production 1961-2007
22
San Joaquin Valley SF Housing Production Has Been More Volatile Than California’s
,
0
0.5
1
1.5
2
2.5
3
3.5
4
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Year
Perc
ent o
f Hou
sing
Sto
ck th
at is
New
C
onst
ruct
ion
(%)
SanJoaquinValley
California
SF Production as Percent of Housing Stock, 1980 - 2007
23
OutlineThe Issue: Foreclosures and Urban Development
Foreclosures in the San Joaquin Valley
Foreclosures, Housing Production, and Urban Development
Conclusions
24
ConclusionsForeclosures in the SJ Valley have increased dramatically
Foreclosures are occurring heavily in new development on the periphery of cities
The foreclosure crisis will lengthen the housing market recovery time significantly
Foreclosure Policy has paid little attention to the development impacts
25
Policy Options
Opportunity for localities to acquire affordable housing?Reconsideration of state policy towards development– SB 375– Infrastructure financing
Reconsideration of local government financing– Less dependence on development fees– Less reliance on sales taxes