By Sanford Nax, The Fresno Bee
For the second time in a month, the federal government has used stimulus money to jump-start two affordablehousing developments in the central San Joaquin Valley.
Almost $19 million from the American Recovery and Reinvestment Act will replace tax-credit financing and help complete an 81-unit apartment complex arrayed in 12 buildings in Selma, as well as a 57-unit project in Dinuba. Those funds, approved Wednesday by the state Treasurer’s Office, follow $16 million in government financing approved in July for affordable-housing apartment complexes in Hanford and Lindsay.
Provisions in the American Recovery and Reinvestment Act allow developers to exchange tax credits — which are sold to finance construction of affordable housing — for cash. The cash-for-credits provisions were included because tax credits, which are normally sold to investors, are proving a tough sell in this sluggish real estate environment.
An objective of the stimulus program is to generate jobs. Percy Vaz, president of AMCAL, said his company’s Selma apartment complex will provide about 150 construction jobs starting in October. The apartment complexes are among 14 affordable-housing projects in California that received $67 million in financing. Additional projects could be approved later this month and in December, said Joe DeAnda, spokesman for state Treasurer Bill Lockyer
Economists often use the ratio between home price and rental rates to help determine whether a market is at equilibrium. According to one survey, Fresno is pretty close. Economic theory contends a home’s sale price is derived from the rent it can generate, and in the U.S. that has generally been 15-to-1 (it took $150,000 to buy a house that would rent for about $10,000 per year).
But that changed beginning in 1995, and by the peak of the real estate bubble, the ratio was 25-to-1 in some inflated markets. A new study by the Center for Economic and Policy Research and the National Low Income Housing Coalition looks at the impact of two years of declining prices on some of those markets. Here’s what it found:
The precipitous fall in Fresno prices has helped bring rents and prices in line. A bubble market 21.4-to-1 gap in April 2008 fell by April 2009 to 15.8. In some places, the deflation fell through the line, and the market is out of equilibrium the other way. Stockton, for example, tumbled from a 24.7-to-1 gap in April 2008 to 14.2. Riverside/San Bernardino fell from 20.1-to-1 to 13.7.
More than 380 first-time home buyers in the state — including 15 in Fresno and two in Visalia — have been approved for a free mortgage protection plan offered by the California Association of Realtors. The program provides up to $1,500 per month for six months to first-time home buyers who are laid off from their jobs.
The plan recently received a $420,000 grant from the National Association of Realtors to provide more policies. The state association estimates that about 4,200 families will receive policies before the program ends Dec. 31. Applications can be obtained from many real estate agents.