Comstock's magazine 0119 - January 2019 - Page 46

n HISTORY POPULATION GROWTH VS. HOUSING GROWTH TOTAL HOUSING UNITS SAC COUNTY POPULATION 1,600,000- ‘87 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 Thanks to a combination of Garn, lower interest rates and an improving economy, the market recovered — from 3,000 new homes in ’83 to 14,700 in ’87. 1990 SADDAM HUSSEIN INVADES KUWAIT “I remember exactly when things started to change,” re- members Gobbi. He looked at his paper reports — this was pre-computer — and stared at the charts. “It was the weird- est thing. When the Gulf War started, I looked at the monthly chart and saw that inventory increased and sales went back- ward. Consumer confidence just went through the floor.” Gob- bi says that he doesn’t blame the ’90s housing slump com- pletely on the Gulf War, but “this was the emotional issue that started the turn.” While prices remained about the same (around $230,000), in the weak economy, the ’90s would see the number of new units plunge from 12,000 in 1990 to 1,700 in 1998. 1995 COSTA HAWKINS RENTAL HOUSING ACT As voters in the recent midterm election remember all too well, Costa Hawkins limits the ability of the city to impose rent control laws (which would set a ceiling on how high landlords can hike the rent each year). Many builders insist that the housing crisis would be even worse without Costa Hawkins, citing Swedish econo- mist Assar Lindbeck who quipped, “In many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.” 46 | January 2019 1999 REPEAL OF THE GLASS-STEAGALL ACT To spur financial “innovation,” the Depression-era banking regula- tions were repealed. Banks were now free to make dicey loans and bundle them into the toxic financial instruments that are widely seen to have led to the financial collapse. “The banks took advan- tage, and they started pumping out the loans and not thinking about consequences,” says Gobbi. “They could sell houses to just about anybody. If they could process the loan, they got paid, and they made money. The ‘greed factor’ steps in. It’s human nature.” Just as sugar can give you a burst of energy before a crash, the easy lending led to more new homes. From 2000 to 2006, Sacramento built 68,600 new homes (an annual average of near- ly 10,000), compared to 1,700 in ’98. Accelerating the growth: reverse redlining. “There were groups of people that for the longest time couldn’t get credit, based on racial factors,” says Garcia. “There was a concerted effort to start extending credit to these people, but done in a predatory way.” The predatory loans often had balloon interest payments that could result in foreclo- sure or bankruptcy. “This was the genesis of the most recent re- cession,” says Garcia. 2006 ELK GROVE FORECLOSURES “July 2006 was the last month in which we saw the upward movement in pricing,” remembers Dave Tanner, CEO of Sacra- mento Association of Realtors. “By August, sales had dropped off.” He says that Elk Grove, Folsom, Rancho Cordova and Natomas were especially punished, as they had the most new