29A - NSP2 AMEND TARGET AREA - Laserfiche WebLink

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If one were to assume that the number of homes being foreclosed and abandoned each month in this area will return to historic norms in the near future, these data would suggests that the private real estate market might be able to largely eliminate the problem in no more than three years. The analysis below demonstrates that this is not true. (2) Over - Building, Over Valuation and Unemployment as Causative Factors Overbuilding of housing is not a factor contributing to abandonment and foreclosure problem in Santa Ana. In preparing its new Housing Element as required by the State of California, the City of Santa Ana determined that very little new construction of residential housing has occurred in the past five years. Over - valuation, assumed here to mean the establishment of artificially reflected values due to the availability of subprime and adjustable loans affordable to homebuyers interested in buying in Santa Ana, is a factor. Household income estimates produced by SRC, LLC (SRC) a national firm specializing in demographic research, suggest that between 2000 and 2008 median household incomes in Santa Ana and in its target geography increased at an average annual rate of approximately 1.5 percent. By contrast, and as shown in Chart 1, Santa Ana residential sales prices started going up dramatically in 2002, and by 2006 had gone up by 123 percent. The year 2007 saw the beginning of an equally dramatic decline. Many Santa Ana homebuyers who bought during the intervening years now find themselves owing far more on their homes than they are currently worth. Many homeowners in such situations react by abandoning their homes. Conversely, as home prices have fallen, home sales in Santa Ana have increased in response. NSP 2 Substantial Amendment - City of Santa Ana Page 3 29A -5