Transcript Community Stabilization

Piece by Piece
Neighborhood Investment Conference
Learning from Phoenix
German Reyes
VP, Community Stabilization
Who is Chicanos Por La Causa (CPLC)?

501(c)3, Founded in 1969






Now one of the largest Hispanic Community Development Corporations in the United
States
Approximately 750 employees
HQ in Phoenix; Operations in AZ, NV and NM
Highly diverse nonprofit with 4 business “pillars”
 Social Services
 Education
 Economic Development
 Housing
Housing Counseling Agency certified in Phoenix for 27 years
Housing Counseling Agency in Las Vegas


Established in 2010
Freddie Mac Center
CPLC’s NSP2 National Program

Consortium





1 of 4 National Consortiums as defined by HUD
13 Nonprofit agencies in 15 markets located in 8 states and D.C.
$137M – largest grant ever to a Latino-based CDC
CPLC Lead Agency due to capacity (compliance, legal, audit, F/A)
Focus on:

Results! (Strict Expenditure Deadlines, and entirely affordable markets)




50% Expenditure in 24 months (Investor Activity a challenge  led to “First Look”)
IMPACT – nearly 2500 “national objectives” (mostly SRF) to meet goal
JOBS! Incredible “jobs” story being told as a result of housing
Strong National Relationships created to assist in REO/delinquent
Asset Procurement


Fannie Mae, NCST, HUD/FHA
Numerous lenders, banking institutions
NSP II NATIONAL COALITION
NorrisSquare
CHISPA
CRHDC
Del Norte
NEW
CPLC YES
TDS
El Paso CUSO
AHSTI
CDCB
TRP
Mi Casa
NSP2 Performance
•3 Years are over – How have we done?
Gr 101013
NATIONAL PERFORMANCE – RESULTS!!
*633 TOTAL GRANTEES*
State
MI
Grantee
State of Michigan
AZ Chicanos Por La Causa, Inc.
Appropriation
NSP2
NSP2
Grant Amount
PI Drawn
$223,875,399
$8,515,929
$137,107,133
$51,518,806
Total Drawn
% Drawn
$225,655,621
100.8%
$179,671,193
131.0%
CA
State of California
NSP1
$145,071,506
$39,503,051
$171,184,892
118.0%
GA
Habitat for Humanity International Inc
NSP2
$137,620,088
$0
$137,620,088
100.0%
OH
State of Ohio
NSP1
$116,859,223
$2,221,229
$118,768,063
101.6%
CA
Los Angeles, CA
NSP2
$100,000,000
$14,206,628
$112,249,389
112.2%
FL
State of Florida
NSP1
$91,141,478
$16,864,561
$103,899,771
114.0%
MA
The Community Builders, Inc.
NSP2
$78,617,631
$22,802,864
$101,420,494
129.0%
MI
State of Michigan
NSP1
$97,964,416
$5,619,335
$101,117,689
103.2%
IL
Chicago, IL
NSP2
$98,008,384
$857,141
$97,997,510
100.0%
FL
NHS of South Florida, Inc.
NSP2
$89,375,000
$2,547,031
$91,922,031
102.8%
IN
State of Indiana - IHCDA
NSP1
$83,757,048
$4,771,471
$88,528,509
105.7%
GA
State of Georgia
NSP1
$77,085,125
$23,015,102
$88,351,744
114.6%
TX
State of Texas - TDHCA
NSP1
$91,323,273
$3,547,816
$77,438,728
84.8%
CA
Riverside County, CA
NSP1
$48,567,786
$35,439,139
$75,962,368
156.4%
AZ
Phoenix, AZ
NSP2
$60,000,000
$13,788,691
$67,183,465
112.0%
FL
Dade County, FL
NSP1
$62,207,200
$2,632,179
$63,448,588
102.0%
PA
State of Pennsylvania
NSP1
$59,631,318
$6,876,454
$61,671,681
103.4%
CA
Los Angeles NHS Inc.
NSP2
$60,000,000
$15,228,747
$58,935,602
98.2%
Per HUD Weekly 9/9/2013
NATIONAL PERFORMANCE!!
“PROGRAM INCOME” – LEVERAGING
State
Grantee
(633 TOTAL GRANTEES)
Appropriation
Grant
Amount
PI Drawn
Total Drawn
% Drawn
AZ
Chicanos Por La Causa, Inc.
NSP2
$137,107,133
$51,518,806
$179,671,193
131.0%
CA
State of California
NSP1
$145,071,506
$39,503,051
$171,184,892
118.0%
CA
Riverside County, CA
NSP1
$48,567,786
$35,439,139
$75,962,368
156.4%
GA
State of Georgia
NSP1
$77,085,125
$23,015,102
$88,351,744
114.6%
MA
The Community Builders, Inc.
NSP2
$78,617,631
$22,802,864
$101,420,494
129.0%
VA
State of Virginia
NSP1
$38,749,931
$22,368,954
$51,638,393
133.3%
ID
NSP1
$19,600,000
$17,570,385
$34,687,046
177.0%
FL
State of Idaho
Neighborhood Lending Partners of West Florida,
Inc.
NSP2
$50,000,000
$17,436,867
$58,735,550
117.5%
FL
State of Florida
NSP1
$91,141,478
$16,864,561
$103,899,771
114.0%
CA
Los Angeles Neighborhood Housing Services Inc.
NSP2
$60,000,000
$15,228,747
$58,935,602
98.2%
CA
Los Angeles, CA
NSP2
$100,000,000
$14,206,628
$112,249,389
112.2%
AZ
Phoenix, AZ
NSP2
$60,000,000
$13,788,691
$67,183,465
112.0%
MD
Healthy Neighborhoods Inc.
NSP2
$26,092,880
$12,316,489
$35,134,012
134.6%
CA
Hsg Trust of Santa Clara County
NSP2
$25,000,000
$11,354,019
$30,967,740
123.9%
MN
State of Minnesota
NSP1
$38,849,929
$11,036,129
$46,580,506
119.9%
(per HUD Weekly 9/9/2013)
NSP2 PERFORMANCE DASHBOARD – RESULTS!!
NSP2 Performance (Cumulative)
Introduction:
The intent of this matrix is to capture a true snapshot as of:
ACTIVITY
9/9/2013
that will recognize accomplishments and NSP2 financial
position in relation to the Consortium Funding Agreements.
Total housing production attainment is also shown relative
to each members and total consortium goals.
APPROVED BUDGET
ADMINISTRATIVE
Budget
($M)
Actual
($M)
Attainm ent%
Budget
($M)
123.40
173.19
140.36%
13.7
Goal
796
Expenditure Summary:
Actual
($M)
17.981
Attainm ent%
131.25%
Single Family Acquisition Attainment
Actual
Attainment%
744
93.47%
Multi Family Acquisition Attainment
Total Expenditure (Activity + Administrative) $
Attainment
191.18 Million
139.45%
Goal
Actual
Attainment%
676
694
102.66%
NSP2 Performance by Consortium Member
SF Acquisition Attainment
CM
ACTIVITY
Budget ($M)
Actual ($M)
APPROVED BUDGET
ADMINISTRATIVE
CTD%
Budget ($M)
Actual ($M)
103.18%
0.202
0.147
101.88%
0.309
0.295
123.81%
0.245
0.278
151.15%
2.284
3.452
179.73%
0.868
1.430
156.77%
0.713
0.622
106.37%
0.186
0.257
117.70%
0.519
0.557
153.96%
1.718
2.261
123.92%
0.638
0.536
124.41%
0.409
0.581
100.46%
0.963
1.024
138.22%
0.159
0.230
N/A
4.496
6.310
AHSTI
2.700
2.786
CDCB
4.141
4.219
CHISPA
3.275
4.055
CPLC AZ
30.583
46.227
CRHDC
11.626
20.895
DEL NORTE
10.950
17.166
EPAHCUSO
2.494
2.653
MI CASA
6.958
8.189
NEW
23.010
35.426
NSCA
7.145
8.854
TDS
5.485
6.824
TRP
12.902
12.961
YES
2.127
2.940
CPLC NTL
N/A
N/A
Notes:
* NEW has created 537 redevelopment objectives
TRP Creating 40 rentals from 15 SFR acquistions (29 sfr + 1 six plex)
(does not include Redevelopm ent)
CTD%
72.68%
95.48%
113.54%
151.14%
164.76%
87.30%
137.94%
107.27%
131.63%
84.05%
142.02%
106.34%
144.84%
140.34%
TOTAL
101.06%
101.43%
123.10%
151.15%
178.69%
152.52%
108.56%
116.98%
152.41%
120.65%
125.63%
100.86%
138.68%
140.34%
MF Acquisition Attainment
Goal
Actual
CTD%
Goal
Actual
CTD%
40
44
31
236
74
80
N/A
69
80
30
47
55
10
N/A
22
64
18
225
95
49
N/A
51
74
41
50
39
16
N/A
55.00%
145.45%
58.06%
95.34%
128.38%
61.25%
N/A
73.91%
92.50%
136.67%
106.38%
70.91%
160.00%
N/A
N/A
N/A
N/A
600
20
56
N/A
N/A
N/A
N/A
N/A
0
N/A
N/A
N/A
N/A
N/A
586
20
82
N/A
N/A
*
N/A
N/A
6
N/A
N/A
N/A
N/A
N/A
98%
100%
146%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
CPLC’s NSP2 National Program - Impact



CPLC has made significant efforts to measure local and
national impact of NSP2.
Direct and induced impact is critical to the stabilization of
communities
A few highlites for AZ Market:




CPLC AZ received $32M in NSP2 grant monies (most in consortium)
NSP2 is forecasted to add $66.33M in gross state product for the
period 2010-2013. This is DOUBLE the initial federal investment!
NSP2 is forecasted to add nearly $40M in real disposable income in
the state of Arizona (2010-2013)
Attribute success at National Level to our deep-rooted CDCs with
Housing Counseling Agencies
CPLC’s NSP2 National Program – Jobs!



Section 3 extremely important in strategy implementation
 Creating local job opportunities to individuals
 Creating local contract opportunities to contractors
Great success in creating and retaining jobs
Created a measurable outcome illustrating the opportunity
of job creation and economic development using federal
funds/stimulus…but something that can be replicated in
open market
Learning from “NSP2” Phoenix
•
Significant learning from single family REO development (acq, rehab and resale)
•
Estimation of rehab critical
•
25-30% of Acquisition Price was reasonable
•
CPLC witnessed price increases over the last 2-3 years prior to frantic activity in
Phx area
•
For example, early on, It was common to leave significant development
subsidy…

TDC: $90,000 acquisition + $30000 rehab - sell for $100,000
•
Approximately two years ago, values were rising fast:

TDC: $100,000 acquisition + $30,000 rehab - appraised values were
greater than $130,000

Prices increases in excess of 30% when same property was re-sold
became common (market trend was noticeably positive)

Effectively presented a value-proposition for investors
LEARNING FROM PHOENIX
Atlanta & Phoenix Markets
2/16/12
Jan-1991
Nov-1991
Sep-1992
Jul-1993
May-1994
Mar-1995
Jan-1996
Nov-1996
Sep-1997
Jul-1998
May-1999
Mar-2000
Jan-2001
Nov-2001
Sep-2002
Jul-2003
May-2004
Mar-2005
Jan-2006
Nov-2006
Sep-2007
Jul-2008
May-2009
Mar-2010
Jan-2011
Nov-2011
Sep-2012
Jul-2013
REAL ESTATE MARKET
SNAPSHOT
S&P/Case-Shiller GA-Atlanta Home Price Index
160
140
120
100
80
60
40
S&P/Case-Shiller GA-Atlanta
Home Price Index
20
0
Jan-1991
Aug-1991
Mar-1992
Oct-1992
May-1993
Dec-1993
Jul-1994
Feb-1995
Sep-1995
Apr-1996
Nov-1996
Jun-1997
Jan-1998
Aug-1998
Mar-1999
Oct-1999
May-2000
Dec-2000
Jul-2001
Feb-2002
Sep-2002
Apr-2003
Nov-2003
Jun-2004
Jan-2005
Aug-2005
Mar-2006
Oct-2006
May-2007
Dec-2007
Jul-2008
Feb-2009
Sep-2009
Apr-2010
Nov-2010
Jun-2011
Jan-2012
Aug-2012
Mar-2013
A Comparison of Markets
250
200
150
S&P/Case-Shiller GAAtlanta Home Price
Index
100
S&P/Case-Shiller GAPhoenix Home Price
Index
50
0
Gr 101013
A Comparison of Markets
Effective date
S&P/Case-Shiller
GA-Atlanta Home
Price Index
S&P/Case-Shiller GA-Phoenix Home Price Index
Jun-2012
91.75
114.68
Jul-2012
94.15
117.22
Aug-2012
95.8
119.28
Sep-2012
96.06
120.65
Oct-2012
95.6
122.39
Nov-2012
95.68
124.16
Dec-2012
95.95
125.33
Jan-2013
96.98
126.69
Feb-2013
97.01
128.1
Mar-2013
98.25
130.29
Apr-2013
102.01
132.47
May-2013
105.51
134.97
Jun-2013
109.15
137.36
Jul-2013
111.54
139.36
Gr 101013
Snapshot Stats-Phx/Atl
Market Summary
There are currently 9,113 properties in Phoenix, AZ that are in some stage of foreclosure (default, auction or bank owned)
while the number of homes listed for sale on RealtyTrac is4,607.
In August, the number of properties that received a foreclosure filing in Phoenix, AZ was 0% higher than the previous month
and 65% lower than the same time last year.
Home sales for July 2013 were up 13% compared with the previous month, and up 6% compared with a year ago. The median
sales price of a non-distressed home was $164,500. The median sales price of a foreclosure home was $125,000, or 24%
lower than non-distressed home sales.
Sales Prices - Phoenix, AZ
Foreclosure Discount
$39,500( 24.0%)
3.9% ( $1,500) vs Jul 2012
Market Summary
There are currently 4,258 properties in Atlanta, GA that are in some stage of foreclosure (default, auction or bank owned)
while the number of homes listed for sale on RealtyTrac is4,370.
In August, the number of properties that received a foreclosure filing in Atlanta, GA was 35% lower than the previous month
and 66% lower than the same time last year.
Home sales for July 2013 were up 17% compared with the previous month, and up 38% compared with a year ago. The
median sales price of a non-distressed home was $224,200. The median sales price of a foreclosure home was $92,000, or
59% lower than non-distressed home sales.
Sales Prices - Atlanta, GA
Foreclosure Discount
$132,200( 59.0%)
www.cplc.org
Snapshot Stats
Phoenix-Mesa-Glendale, AZ Metropolitan
Statistical Area
Forecast change: first quarter, 2013 - first
quarter, 2014
+5.1%
Forecast change: first quarter, 2014 - first
quarter, 2015
+2.9%
Market fundamentals
Median Family Income
(First quarter 2013)
$60,700
Median Home Price
(First quarter 2013)
$192,000
Change in Home Prices
(From First quarter 2012 through First quarter 2013)
+22.8%
Worst 1-Year Home Price Change
(1980-2013)
-35.7%
(2009:Q1
Forecast as of August, 2013, courtesy of CoreLogic.
gr 101013
Snapshot Stats
Atlanta-Sandy Springs-Marietta, GA
Metropolitan Statistical Area
Forecast change: first quarter, 2013 - first
quarter, 2014
+4.9%
Forecast change: first quarter, 2014 - first
quarter, 2015
+3.3%
Market fundamentals
Median Family Income
(First quarter 2013)
$66,200
Median Home Price
(First quarter 2013)
$146,000
Change in Home Prices
(From First quarter 2012 through First quarter 2013)
+19.2%
Worst 1-Year Home Price Change
(1980-2013)
-17.6%
(2012:Q1
Forecast as of August, 2013, courtesy of CoreLogic.
gr 101013
•More than half of the markets in the index, 14, were down by 20%
or more compared to March of 2006 and
•Las Vegas was down in excess of 53%.
•Markets in California and the sand states of Florida, Nevada and Arizona
were down by the largest amounts despite frenzied investor purchases.
www.cplc.org
NUMBER OF PROPERTIES PER ESTIMATED MARKET
HIGHEST AVAILABILITY
$100-200K/7,552 PROPERTIES
Realtytrac2013
Markets with the Largest Change in Homeownership Rate
Nevada Homeownership rate = 53.3% 2nd QTR 2013
•THE NATIONAL HOMEOWNERSHIP RATE PEAKED AT 69% IN 2004, BUT FELL FOUR
PERCENTAGE POINTS TO 65% IN THE 2ND QUARTER OF 2013.
DESPITE HAVING EXPERIENCED THE LARGE NUMBER OF FORECLOSURES IN
CALIFORNIA AND FLORIDA, THOSE STATES ARE NOT AMONG THE TOP FIVE STATES
IN TERMS OF CHANGE IN HOMEOWNERSHIP, THOUGH NEVADA IS.
National Association of Realtors
Investor Activity (buy vs rent)




If I’m an investor, do I continue to buy?
It’s all about location
What is the Area Median Income? What is the Median
Home Price for the area?
Maximum ratios used to compute housing expense

For example:





$60,000 = AMI for a family of 4 (Phx AMI = $60,700)
Equates to $5000 gross / month
Equates to $1500 / mo as a Housing Expense (per 30% ratio)
M*I = $1200 if T&I&HOA, etc = $300/mo (approx 20%)
At 3.5% DP, a 30 year, 5.5% mortgage allows a family to purchase:
 $219,000!

P&I payment = $1199.94
Investor Activity

In Phoenix, recall:




In Atlanta, recall:






Median Home Price = $192,000
“Affordable” Price point = $219,000
Represents an upside of: $27,000 or 14%
Median Home Price = $146,000
Area Median Income = $66,200
Using similar approach, P&I = $1320 (Housing Expense Max)
This represents an “Affordable Price” = $241,000
Represents an upside of: $95,000 or 65%!
Note: Housing Expense Max is also related to maximum lease/rent amount!
So analyzing Fair Market Rents provides a rental strategy as well.
RENTAL AS A TEMPORARY EXIT STRATEGY
Maricopa County, Arizona
Final FY2013
FMRs (per HUD)
Efficiency
1 Bedroom
2 Bedrooms
3 Bedrooms
4 Bedrooms
$593
$748
$925
$1,363
$1,592
Fulton County, Georgia
Final FY2013
FMRs (per HUD)
Efficiency
1 Bedroom
2 Bedrooms
3 Bedrooms
4 Bedrooms
$676
$737
$874
$1,158
$1,406
Take Phoenix Example: Purchase for $192,000
Rent = $1592 -> 20% Expense -> $1,274/mo rent
Equates to $15,283 annual rents = 8% return!
Investor Activity






Is it good?
Is it stabilizing neighborhoods?

Yes, certainly initially.

Investments spurs confidence if capital infused in economic development, jobs, etc.

Begins to create a bottom to local housing prices

Neighborhood “Confidence”

Long term – if left as rental, perhaps not so good
Where is the wealth? Especially for disproportionately affected communities predominantly Latino or African
American?

Investors strip wealth from communities. So what’s the balance?
Neighborhood

Homeownership typically preferred over rentership. Why?

Assume “pride of ownership” when you own vs rent

Homeowners are vested in their community (schools, church, etc)

Renters – are they preferable to vacancy?

If Pride of Ownership exists with tenants – yes. If not, maybe vacancy preferred if property is
maintained by owner

Why lease with option to buy makes sense…tenant has a vested interest in the property
Constrained Demand

Creates Opportunity for new construction
In submarkets, Investors can drive the market

Certain areas may be prone to downward pressure if investors “dump” their inventory

Can we create a “hybrid” model where Investors incorporate non profit developers into their model?
A Happy Medium?


How do we (ie. Non profits) work with investors?
Offer them a channel to procure qualified homebuyers or:



Lease to own tenants/buyers
Counseling/HBE incredibly important for potential homeowners,
especially FTHB
Exit strategy for the investor?


Make them “socially-minded”

Walk the talk





Sell underperforming assets to local nonprofits?
Investors “say” they are mindful of markets, etc.
Clear that they are purchasing ‘commodities’ when they make decisions
Set aside a portion of their homes for low income?!?
Creative strategy for investors as they look to bid/win large FHA pools
Certain Submarkets may present a very effective partnership as
other subsidies may be inserted by the non profit

Non profit can effectively assist in hedging an investor’s “downside”
MUCHAS GRACIAS!