Housing Challenges: 2010 and Beyond.

Housing Challenges:2010 and Beyond. Atlanta Regional Housing Forum Raymond Christman Livable Communities Coalition

TODAY’S TOPICS • A quick look back • The situation today • Key influences going forward • Implications for DeKalb County (and other local governments)

THE HOUSING MELTDOWN:HOW DID WE GET HERE? • Rampant expansion of new mortgage products (option ARMs, I/O loans, etc) for new categories of customers • Mortgage fraud and lack of consumer protection • Lax underwriting standards by banks • Wall Street saw new profit opportunities through securitization – fed by banks and brokers • Nurturing political and regulatory environment

WHERE ARE WE TODAY? • High foreclosure rates continuing – expected until 2012-13 and creating excess inventory • High unemployment exacerbating problem • Bank mortgage underwriting for residential mortgages very tight and undergoing radical change • We may be at bottom – but still bumping along it

THE HOUSING FINANCE MARKET HAS BEEN EFFECTIVELY NATIONALIZED • FHA guaranteeing one-third of all mortgages • Fannie/Freddie buying 85% of mortgages not guaranteed through FHA • No private securitization market • Limited credit available from banks for mortgages that can’t be sold • Major federal investment in foreclosure mitigation (NSP), mortgage modification assistance, and new funding for affordable housing (LIHTC)

FORECAST FOR 2010 • If you liked 2009, you’ll …………… • The housing economy will take at least 3-5 years to return to a “new normal” • The Atlanta region is in tougher shape than most – consequences of overbuilding, predatory lending, failing banks, heavier impact from foreclosure • Recovery will be slow and painful

BULIDING PERMIT TRENDSPercent Change 2008-2009 (Through June)

FORECLOSURE DATAForeclosure Filings 2009 YTD vs. 2008

KEY FACTORS THAT WILL INFLUENCEHOUSING RECOVERY • Financial health of FHA • Disposition of Fannie/Freddie • Willingness of FDIC/Treasury to allow private capital to buy troubled banks and shed troubled assets • Success in permanently modifying mortgages LITTLE CAN BE DONE LOCALLY WITH RESPECT TO ANY OF THESE

IMPLICATIONS FOR DEKALB COUNTY(AND OTHER LOCAL GOVERNMENTS) • Develop a strategy • Build a tool-kit • Link programs to land use regulation • Build political will and consensus

STRATEGY • Have a point of view about your county or community • Demographic and income characteristics • What are housing needs and goals • Who are you trying to help • Lessons from other regions • Housing as part of a sustainable community • Make green design and building a centerpiece • Connect transportation and housing • Think long-term – now is the opportunity • Target sites for development/redevelopment

THE TOOL-KIT • Public (federal) money is available in unprecedented amounts for housing – take advantage to build a lasting program (NSP, HOME, CDBG, etc) • Create programs that have repayment streams and that recycle funds (loans, not just grants, land banking, etc.) • Opportunities for dedicated housing trust funds • Look at opportunities for supplementing federal funds with local funds (bond issues, etc)

LINK PROGRAMS TO LAND USEREGULATION • Local zoning codes, building codes, subdivision regulations have pervasive effect on housing availability and cost • Look at best practices elsewhere: accessory dwelling units, parking requirements, permitted building type, setback requirements, minimum floor area requirement, etc • Permitting and review requirements and flexibility • Building codes should facilitate rehabilitation • Inclusionary zoning incentives

BUILD POLITICAL WILL ANDCONSENSUS • Public commitment to affordable housing • Create local organizational capacity – professionalism and experience • Commit local financial resources • Build state and federal partnerships

Q & A

Housing Challenges: 2010 and Beyond.