1. Foreclosures and Urban
Development in the
San Joaquin Valley
Michael Teitz
Blair Schaeffer

2. 2
Outline
The Issue: Foreclosures and Urban
Development
Foreclosures in the San Joaquin Valley
Foreclosures, Housing Production, and Urban
Development
Conclusions

3. 3
Is This Housing Downturn Different?
Larger in scale than any seen in recent decades
Foreclosures at a level exceeding anything in
recent history
Preceded by financial irregularities larger than any
seen in housing since the S&L crisis
Simultaneous collapse of significant parts of the
financial sector
For the San Joaquin Valley, some unique factors

4. 4
How Do Foreclosures Affect the SJ
Valley?
The SJ Valley is historically a “one-industry” region
– Agriculture and services were its economic
foundation
From 1990 onward, housing production and urban
development became major elements of the
economy
– Spillover from the Bay Area and Los Angeles
– Growth of demand for retirement
Local governments have increasingly relied on
development fees to balance budgets
Thus, vulnerable to a housing downturn

5. 5
Outline
The Issue: Foreclosures and Urban
Development
Foreclosures in the San Joaquin Valley
Foreclosures, Housing Production, and Urban
Development
Conclusions

6. 6
Why Study Foreclosures?
Foreclosures are key indicators of housing
market health.
Foreclosures have adverse affects on individuals
and neighborhoods.
They offer clues to the future of urban
development.

7. 7
The San Joaquin Valley

8. 8
Foreclosures in the San Joaquin
Valley Have Grown Dramatically…
Foreclosures in the San Joaquin Valley by Month July 1995- May2008
0
500
1000
1500
2000
2500
3000
3500
4000
Jul-95
Nov-95
Mar-96
Jul-96
Nov-96
Mar-97
Jul-97
Nov-97
Mar-98
Jul-98
Nov-98
Mar-99
Jul-99
Nov-99
Mar-00
Jul-00
Nov-00
Mar-01
Jul-01
Nov-01
Mar-02
Jul-02
Nov-02
Mar-03
Jul-03
Nov-03
Mar-04
Jul-04
Nov-04
Mar-05
Jul-05
Nov-05
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Month
Foreclosures
Sources: Rand California; DataQuick

9. 9
…Coinciding with a Huge Increase in
Subprime Loans
Subprime Loans by Origination Year
San Joaquin Valley 1999-2007
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
NumberofSubprimeLoans
Foreclosures in the San Joaquin Valley
by Year 1999- May 2008
0
2000
4000
6000
8000
10000
12000
14000
16000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Foreclosures
San
Joaquin
County
Stanislaus
County
Merced
County
Madera
County
Fresno
County
Kings
County
Tulare
County
Kern
County
Source: Loan Performance

10. 10
Foreclosures from 2003 to 2008 Hit
Hard in Northern Counties

11. 11
Foreclosures Hit Both Cities and
Suburbs…
Legend
Foreclosed Houses Built 1998 and After
Foreclosed Houses Built Before 1998
^_ Major Cities
Highway 99
San Joaquin County
San Joaquin County
Foreclosures, 2003-2008

12. 12
…But New Subdivisions Were Hit
Hard

13. 13
As a Result Individuals and Families
Suffer…
■ Home Loss ■ Loss of Home Equity
■ Credit Rating Damage ■ Pain and Shame
Patterson Gardens
Subdivision built in 2005
(Patterson, CA)

14. 14
…As do Neighborhoods…
■ Decrease in housing prices ■ Home Abandonment
■ Rise in neighborhood crime ■ Blight
Visalia, Ca Merced, CA

15. 15
…And Local Governments and
Housing Development.
Elk Grove

16. 16
Outline
The Issue: Foreclosures and Urban
Development
Foreclosures in the San Joaquin Valley
Foreclosures, Housing Production, and Urban
Development
Conclusions

17. 17
Foreclosures Affect Urban
Development
Weaken housing market Stall Development
Visalia, CA
■
Atwater, CA

18. 18
Major Projects are Derailed
Elk Grove

19. 19
Foreclosures Mirror New
Construction…
Comparison of New Single Family Construction and Foreclosures
in the San Joaquin Valley 1997-2007
0
0.5
1
1.5
2
2.5
3
3.5
4
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
PercentofHousingStock(%)
Built by Year
Foreclosed

20. 20
…And Seem Especially Important in
the North and South of the Valley
Number of Foreclosures by County
January 1997 to May 2008
0
2000
4000
6000
8000
10000
12000
14000
16000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
NumberofForeclosures
New Single Family Construction
January 1997 to May 2008
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
NewlyBuiltSingleFamilyHouses
San
Joaquin
County
Stanislaus
County
Merced
County
Madera
County
Fresno
County
Kings
County
Tulare
County
Kern
County

21. 21
California’s Housing Cycle May Have
Changed
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Year
SingleFamilyResidentialUnits
California SF Housing Production 1961-2007

22. 22
San Joaquin Valley SF Housing Production
Has Been More Volatile Than California’s
,
0
0.5
1
1.5
2
2.5
3
3.5
4
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Year
PercentofHousingStockthatisNew
Construction(%)
San
Joaquin
Valley
California
SF Production as Percent of Housing Stock, 1980 - 2007

23. 23
Outline
The Issue: Foreclosures and Urban
Development
Foreclosures in the San Joaquin Valley
Foreclosures, Housing Production, and Urban
Development
Conclusions

24. 24
Conclusions
Foreclosures in the SJ Valley have increased
dramatically
Foreclosures are occurring heavily in new
development on the periphery of cities
The foreclosure crisis will lengthen the housing
market recovery time significantly
Foreclosure Policy has paid little attention to the
development impacts

25. 25
Policy Options
Opportunity for localities to acquire affordable
housing?
Reconsideration of state policy towards
development
– SB 375
– Infrastructure financing
Reconsideration of local government financing
– Less dependence on development fees
– Less reliance on sales taxes