California's Housing Future: Challenges and Opportunities Public Draft

Governor Jerry Brown today released his proposed Budget Summary for 2017-18 which includes the Governor's goals and objectives for the forthcoming year and highlights significant issues, policies, and initiatives.

This proposed Budget confirms the Governor's resolve to work with the Legislature to address the state's housing shortage and affordability pressures. The ideas in the Governor's Budget align and build from the framework adopted in HCD's just-released 2025 Statewide Housing Assessment and include five key principles to be incorporated into a housing package.




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No One is Coming to the Rescue to Solve California’s Housing Crisis. So Let’s Do It Ourselves


January 05, 2017 by Lenny Mendonca and Pete Weber

The first signs appeared years ago, in our own neighborhoods, when we noticed just how many grown kids and grandkids were still living in their parents’ spare bedrooms. Why couldn’t these 25-year-olds get a place of their own? Were there really no available apartments? Wait, they cost how much?!

Then, it dawned on us. Look around, and you see it everywhere. In every town in California, there are too many moms and their kids struggling to find a safe place to sleep at night. There are too many older homeowners trapped in oversized houses, priced out of their own neighborhoods, and unable to move—or have their children—anywhere close by. There are too many blue-collar workers leaving the state because of rising rents and four-hour commutes that are bad for the backs, bad for the air we breathe, and bad for their families. And there are too many workers at every income level—from young doctors to teachers and scientists and entrepreneurs—who scoff at the idea of moving here because it costs too much.

There are too many of us who have been wringing our hands about this for too long.

It’s time. We all know what to do. We need to build more houses. Hundreds of thousands more houses of every shape and size—and at every price. And we need to start now.

More than a dozen housing bills were signed into law last year, but the governor and Legislature missed the opportunity to respond to this crisis on the scale required. A few days ago, the state housing department released a report finding homeownership in California has fallen to its lowest point since the 1940s. Nearly a third of renters—over four million people—are spending more than half of their paychecks on rent. A recent McKinsey study estimated that $140 billion in economic activity is being swallowed up each year by high housing costs. As prices continue to rise, California is now home to 22 percent of the nation’s homeless population.

It doesn’t matter who won the national election or who controls Congress. This is ourproblem, the product of decades of saying “no” to housing, piling up rules and regulations and fees that allow construction of only more and more expensive and heavily subsidized homes.

And it is up to Californians to solve it—to build more houses close to jobs, bus stops, and rail stations, to build them smaller and more quickly, and to make sure the next generation of Californians has the opportunity we had: to buy a home, build wealth over time, and move up in the world.

Over the last year, California Forward and our partners in the California Economic Summithave been working to do just that, bringing together some of the most powerful housing stakeholders in the state—builders and nonprofits, equity groups and environmentalists, local government officials and state agencies—to develop a solution that could actually solve the problem. The Summit set an audacious goal: building one million more homes over the next decade. (Don’t get discouraged, we’ve done it before.) Together, the group developed a comprehensive plan to increase production, make the right public investments to support the most vulnerable Californians, and ensure regulations don’t add so much time and uncertainty to new housing projects that developers build something else, instead.

This “all of the above” strategy (see the California Economic Summit 2016 Playbook, pages 10-11) has been reviewed by experts, reworked and refined and haggled over. It is a pragmatic package of state policy changes that would make more good projects pencil out. It is a lens for viewing this year’s legislative proposals to gauge what’s moving, what’s not, and whether these ideas will meet the scale of the problem. And, if matched with leadership from local governments, it is one of the few legitimate plans out there that would actually result in more housing.

Now is the time for all of us to do our part to move these ideas forward.

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Inland Empire Economic Growth Outpaces State but Challenges Remain

A new economic report about the Inland Empire shows steady gains in logistics, health care and construction sectors as well as a strong job market and economy, but challenges remain with overcoming poverty and low education levels.

The momentum is expected to continue in 2017, said John Husing, chief economist for the Inland Empire Economic Partnership and author of the report.

In all, the Inland Empire has created nearly 240,000 jobs since the low point of the Great Recession.

“We are nearly 100,000 jobs higher than we were than before the Great Recession,” Husing said in a phone interview. “What has happened is better than what’s been going on in the state because we have significant job growth in sectors paying $45,000 to $60,000 a year. We’re in much better shape in that respect.”

Husing’s report was presented Thursday, at the Seventh Annual Southern California Economic Summit in Los Angeles. The summit included discussions on improving the economic viability of local communities and attracting new businesses and industry clusters. More than 400 business and elected leaders attended the event.

“We still have a high number of people that are living in poverty, and we need to lift those up,” said Hasan Ikhrata, executive director of Southern California Association of Governments, one of the event sponsors. “We need to create high paying jobs and continue to do that as we move forward. We have done well. We’re moving in the right direction.”

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FHA Loan Limits to Rise in 2017

HUD No. 16-185
Brian Sullivan
(202) 708-0685
December 1, 2016



WASHINGTON – The Federal Housing Administration (FHA) today announced the agency’s new schedule of loan limits, and due to an increase in housing prices, most areas in the country will see a slight increase in loan limits in 2017. These loan limits are effective for case numbers assigned on or after January 1, 2017, and will remain in effect through the end of the year.

In high-cost areas, the FHA national loan limit “ceiling” will increase to $636,150 from $625,500. FHA will also increase its “floor” to $275,665 from $271,050. Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150. This amount is 150 percent of the national conforming limit of $424,100.

Due to changes in housing prices and the resulting change to FHA’s “floor” and “ceiling” limits, the maximum loan limits for forward mortgages increased in 2,948 counties. There were no areas with a decrease in the maximum loan limits for forward mortgages though they remain unchanged in 286 counties.

FHA’s minimum national loan limit “floor” is set at 65 percent of the national conforming loan limit of $424,100. The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.

Any areas where the loan limit exceeds the “floor” is considered a high cost area. The maximum FHA loan limit “ceiling” for high-cost areas is 150 percent of the national conforming limit. To find a complete list of FHA loan limits, areas at the FHA ceiling, areas between the floor and the ceiling, as well as a list of areas with loan limit increases, visit FHA’s Loan Limits Page.

FHA calculates forward mortgage limits based on median house prices in accordance with the National Housing Act. FHA’s Single Family forward mortgage limits are set by Metropolitan Statistical Area and county. Loan limits for reverse mortgages are also calculated but these do not vary by MSA or county; instead, a single limit applies to all mortgages in the regardless of where they are originated.

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Five Tips on Funding Your Down Payment

One of the biggest obstacles to homeownership is often the down payment. If you want to purchase a home, but are struggling with this issue, follow these five tips from Down Payment Resource, a trusted partner with the Greater Lansing Association of REALTORS, to help get the funding you need.

Automate your savings

Down Payment Resource suggests having a portion of your paycheck automatically deposited into an account specifically reserved for your home purchase. Remember, in addition to a down payment you will also need extra funds for closing costs, movers, and possibly items for your new home, like appliances or window treatments. Any extra savings you can build is helpful.

There are also “round up” programs through different banking institutions that will round up your purchases to the nearest dollar. That extra change adds up over time and can be a big help when you are ready to purchase.

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First-Time Home Buyers: Start Here

So, you’re buying a house. Or, at least, you’re thinking about buying a house.

That’s excellent news. Homeownership is a terrific way to create stability in your life, and to start building wealth for your future.

But, it’s also an emotional time, and one which is fraught with stress. There’s so much money involved when you buy a home and every decision can be analyzed then analyzed again.

So, how do six million people manage to buy new homes each year? With preparation and attention to detail.

You can’t know everything there is to know about buying a home — especially when you’re a first-time home buyer. But, you can do a little research and put yourself in position to succeed.

The more you know, the better off and less stressed you’ll be. You may even get a better deal on your home loan.

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Bring On the Millennials: How the Housing Market is Gearing Up for the Next Generation of Homebuyers

Is the generation that rented its way through the recession ready for homeownership? Some builders think so and are beginning to explore ways to capitalize on pent-up demand. But turning the youngest Gen-Xers and the oldest millennials into homebuyers won’t happen overnight.

Additionally, it’s going to require more than the promise of walkable communities and energy-efficient appliances to propel the next — and largest — class of homebuyers into action. Economists predict that it could take first-time homebuyers at least three years to return to their pre-recession share of accounting for 40% of home sales. That group currently claims a 33% share, up from 29% at the market’s trough, according to Jonathan Smoke, chief economist for real-estate listing website

“We think the potential is there for 2017 to be the year that we get much closer to normal,” he said.

Industry watchers cite wage growth, affordable inventory in markets with attractive job prospects, current owners of existing homes trading up into larger properties and home-finance reform as necessary for this group to contribute to the housing market’s recovery.


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Squeaky-Clean Loans Lead to Near-Zero Borrower Defaults—and That is Not a Good Thing

There’s something interesting and important going on in the mortgage market today: borrowers who took out mortgages in the past five years have rarely defaulted, making them better at paying their mortgages than any other group of mortgage borrowers in history.

This is happening for two main reasons: only the best borrowers are getting loans today and these loans are so thoroughly scrubbed and cleaned before they’re made that hardly any of them end up going into default. A near-zero-default environment is clear evidence that we need to open up the credit box and lend to borrowers with less-than-perfect credit.


The default rate on new mortgages is tracking well below mortgages originated from 1999 to 2003, a period with reasonable lending standards and fairly low default rates. This chart illustrates by origination year the rate at which mortgages guaranteed by Fannie Mae have gone six months delinquent (or liquidated before that point). We refer to this as the default rate. The really poor performance of the 2006–08 vintages jumps off the page.

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From Millennials to Boomers, What to Do Now for Your Retirement

It’s never too early to start planning for retirement, and no matter how old you are, there are steps you can take now to prepare your finances for the kind of retirement you’d like to have.


If you’re in your 20s and 30s, a lot can change between now and your retirement years. In many cases it’s too early to work with a financial advisor on putting together a formal retirement plan. However, there are things you can and should be doing now, including:

  • Having an emergency fund of three to six months’ worth of living expenses set aside in a separate bank account.
  • Grabbing any employer contributions to your 401(k) plan if that’s offered and you’re eligible. You should be saving at least enough to take advantage of this “free” money, and the earlier you start investing, the better. Compound interest allows you to earn on both your original principal and on the interest that adds up over time.
  • Making sure you have adequate life insurance and disability insurance in place, particularly if you are starting a family. This helps take risks off the table that have the possibility of blowing up your long-term finances.
  • Developing good investing habits with a well-diversified, long-term portfolio of stocks, bonds and hard assets like real estate and commodities. Avoid trying to time the market or chase hot stocks or investment products.

20 Hottest Housing Markets in August


  • released its rankings Thursday of the 20 hottest real estate markets for August, and California still dominates the list. Similar to its findings in July, the real estate site said the pace of this month’s sales were the fastest the market has seen in a decade.
  • Year over year, homes are selling 2% faster than in August 2015, however, the median home price edged down $1,000 from July to $250,000. However, that figure is still 8% higher than it was a year ago.
  • The top seven cities on’s August list were the same as they were in July, although there was a minor reshuffling between San Diego, CA and Columbus, OH. The Texas town of Waco was a new entry, however, as was Kennewick, WA, located in the Southeastern part of the state. Detroit also made some headway in August, moving up four places on the list to join the 10 hottest locales.