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Homes for the San Fernando Valley in the New Century

Homes for the San Fernando Valley in the New Century. Challenges and Opportunities. March 26, 2003 Presented by Henry Cisneros. A FFORDABILITY AND H OMEOWNERSHIP. Affordability Now at Near Record Lows. Ratio of Median House Price to Median Income. Ratio of 3.1 in 1975; 4.1 currently.

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Homes for the San Fernando Valley in the New Century

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  1. Homes for the San Fernando Valley in the New Century Challenges and Opportunities March 26, 2003 Presented by Henry Cisneros

  2. AFFORDABILITYANDHOMEOWNERSHIP

  3. AffordabilityNow at Near Record Lows Ratio of Median House Price to Median Income Ratio of 3.1 in 1975; 4.1 currently Source: U.S. Census Bureau, Milken Institute

  4. Affordability: Three Dimensions • Mortgage Interest Rates • Income • Home Prices

  5. National Average 30 Year Conventional Fixed Rate Home Mortgage Mortgage Interest Rates The decline from 8.05% in June, 2000 to 6.5% currently gives the median income household an 18% increase in its purchasing power. Source: Federal Housing Finance Board (Bloomberg)

  6. Household Income Over the last 25 years, incomes have increased steadily. Thousands of $ Source: U.S. Census Bureau, Milken Institute.

  7. Household Income vs. Home Prices But in that time period, incomes have grown slower than home prices. Median home prices increased at an average annual rate of 5.9 percent. When home prices rise faster than incomes, affordability suffers. Thousands of $ Source: U.S. Census Bureau, Milken Institute.

  8. New Privately Owned Housing Units (In Thousands) Home Production The price of homes is a function of supply and demand: the problems of producing homes constrain the supply of new housing units. Source: U.S. Census Bureau

  9. Recommended Ratio: 1 new housing unit for every 1.5 jobs created In Fact: California: 1 to 3.6 Los Angeles: 1 to 5 San Jose: 1 to 7.8

  10. Home Prices are Beyond the Reach of California’s Middle-Class

  11. Affordability • Land Cost • Public Role • Fiscal Issues • Financial Institutions • Gentrification • Homebuyers Assistance • Local Government Homeownership Priorities

  12. Homebuyer Assistance Alliances • Professional & Business Groups • In Cooperation With Employers as Employee Benefits • Immigrant Self-help Advocacy Groups • Community-based Organizations • Church Communities • Person-to-person Explanations

  13. Targeted Mortgage Products The Key to Affordable Urban Home Ownership • First-time Homebuyer Mortgage Assistance • Down Payment Assistance; • Zero Down-Payment with Fannie Mae and KB Mortgage Company for Teachers, Nurses, Policemen, & Firefighters; • “1% down-payment” and low-interest loans sponsored by Fannie Mae or other financial institutions; • Bond financing to create low interest loans for moderately-low income families. • New ACV initiated and targeted products … SPECIAL LOAN PROGRAMS:

  14. Targeted Mortgage Products An Exclusive Financing Option Through Fannie Mae & KB Mortgage Company • Zero Down • Zero Closing Cost • Targets: - Firefighters - Healthcare Professionals - Teachers - Police Officers

  15. VALLEY PROGRESSANDHOMEOWNERSHIP

  16. Homeownership • Traditional Infill Approach • Large Sites: • Brownfields • Large tracts

  17. KB Home at Mountain GlenSylmar, CA 1,650 – 3,999 sq. ft. From the Low $300s

  18. KB Home at Mather AFBSacramento, CA 1,716 – 4,028 sq. ft. $239,500 – $344,000

  19. KB Home at Stapleton AirportDenver, CO 1,248 – 2,153 sq. ft. $180,000 – $300,000

  20. Urban Realities • Land cost can be substantially higher than regional suburban alternatives; land configuration and previous uses increase costs • Smaller & difficult to develop sites • Costs and entitlement processes dictate more expensive and/or higher density products

  21. Urban Realities • Social conditions can be as complex as the physical sites • Older, poorer and more diverse educational institutions

  22. Yet, More American Homeowners Are Seeking Infill Locations To Avoid Congestion, Traffic, and Long Commutes To Enjoy a Metropolitan Lifestyle With Downtown Amenities To Be Near Employment Centers To Be Near Familiar Neighborhoods and Close to Family and Community Roots To Participate in Civic Involvements and Greater Citizen Interactions To Have a Distinctive “Village Within the City” Experience with New Home Comforts and Technologies

  23. Village Green Los Angeles, California

  24. Targeted Consumers Want Location and Convenience • Young Professionals • Empty nesters and retirees • First-time homeowners with young families • Immigrants • Minority homeowners • Working families • Multigenerational households

  25. Work with local governments who declare homeownership a priority to review land use policies and fiscal structure for middle class and entry level affordability. Consider incentives to encourage states and local governments to create housing trust funds with their own funds and with private resources, in order to supplement Federal programs for homeownership.

  26. Expand the concept of empowerment or enterprise zones to create “homeownership zones.” Encourage local governments to assemble sites, clean up brownfields, create land banks, rehabilitate properties, reconstruct infrastructure, and prepare land for large-scale infill neighborhoods.

  27. Many City & County Governments Have Established the Construction of Homes in Central Areas as a Priority • GOVERNMENTS CAN BE HELPFUL: • Identifying Sites in Priority Areas • Helping Assemble Complex Sites • Assuring the Adequacy of Needed Utilities, Transportation, and Other Public Infrastructure • Working to Meet Local “Affordability” Objectives • Expediting the Approval and Entitlement Process • Working with Neighborhood and Community Leaders

  28. Homebuyer Assistance Alliances First-time home buyers, especially immigrant and non-English speaking urban residents, need to be educated and introduced to the fundamentals of homeownership. • Housing Fairs – multiple providers of services; • Non-profit neighborhood organizations; • Training programs for currently non-qualifying homebuyers; • Employer assistance programs; • Full participation of banking and mortgage lenders.

  29. Downtown South (So. Garey @ 7th St.) Pomona, California

  30. Downtown South (So. Garey @ 7th St.) Pomona, California

  31. Downtown South (So. Garey @ 7th St.) Pomona, California

  32. Strategic Partnerships:The Key to Urban Projects • School districts • Neighborhood leaders • Local business • Police • Community colleges • Corporate partners – i.e. telecom/digital • Financial institutions - make homeownership a reality

  33. Homeownership and Demographic Change in California

  34. Population Distribution Source: U.S. 2000 Census & U.S. Census Bureau Population Division, Population Projections of the U.S., Total Population by Race, Hispanic Origin, & Nativity

  35. Population Projections for California In Thousands Source: Public Policy Institute of California

  36. California Population by Race / Ethnic Distribution Source: Public Policy Institute of California

  37. Population Projections by Race / Ethnicity In Thousands (DOF) Source: Public Policy Institute of California

  38. Minority Populations Are Young % of population under 20 Source: Market Segment Research; Population Report, Middle Series, 1996

  39. Minority Households Are Larger Whites Blacks Hispanics Household Size 2.58 2.75 3.54 Source: 1998 Current Population Survey

  40. Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

  41. Over 249,000 --31%-- come from Spanish-speaking countries Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

  42. Over 194,000 --24%-- come from Asian countries Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

  43. Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

  44. Source: U.S. Dept of Justice, Immigration and Naturalization Service, Annual Report, Jan 99

  45. Fact: Minority Families Have More Workers Per Household Households with Three or More Workers, 1990 The Middle Class - 5 County Area Source: Pepperdine University Institute for Public Policy “The Emerging Latino Middle Class” 1997

  46. Growth of the Middle Class: 1989-1999 Hispanic Households Asian Households Total Households African American Households Middle Class Defined: 1989: $23,663 - $36,201 1999: $33,001 - $52,174 Source: U.S. Census Bureau

  47. Projected Owner Occupied Household Growth in Millions 2000 - 2010 African Asian/ Total TotalAmericanHispanicOtherMinority 10.9 m. 1.8 m. 2.2 m. 1.0 m. 5.0 m. Source: 1998 Current Population Survey

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