Flood Insurance fro Natomas

One of the many forms that a borrower signs when buying and financing a home is a simple one-page document from the lender about flood insurance.
Every home in the country is located in some type of federal flood zone. The flood zones range from frequent to unlikely. Most homes in Sacramento are located within a 100- year flood zone (the chance of it flooding in any given year is one in a hundred) and most homes in El Dorado County are located in 500-year flood zones, pretty unlikely if you live above Folsom you are going to have a problem.

The form that you sign with your loan documents, basically says that if the federal government determines that your home lies within a major flood hazard area, the lender could require the borrower to obtain flood insurance. This is a reasonable request since the lender usually has more equity in a property than does the borrower at the time of the loan. Lenders don’t want to have loans on homes that are under water so like the requirement of fire insurance, lenders demand that homes financed with a loan and located in an area prone to flooding have flood insurance.

Occasionally flood prone areas change. Improvements to levees, or the building of a dam may remove a home previously classified in a flood area to an area unlikely to flood. Sometimes the risks of flooding are re-evaluated and a home that wasn’t previously within a more active flood zone is now determined to have more risks of flooding. This is what is happening in Natomas.
Twenty-four thousand people live in the Natomas Bowl. There is a reason we in the industry call it a “bowl” or “basin”. Natomas is prone to flooding. It always has been. Years ago, city officials and developers with the help of the Corps of Engineers re-classified the area from an active flood prone area to an “unlikely” flood area. This allowed builders to build without the requirement for home owners to obtain flood insurance. Now, the Federal Emergency Management Agency (FEMA) wants to re-classify the area back to an active flood area which will require all homeowners to carry flood insurance. Flood Insurance, depending upon the particular zone can range from $300 a year to $1,000 a year on a typical $500,000 home.

The development of Natomas Basin is an example of greed and politics over-ridding common sense. Now area home owners will be forced to pay the price.

Good Feelings

People are feeling pretty good about the way things are. A recent Gallup poll found 75 percent of us feel pretty good about our personal situation. We have some concerns about the other guy but generally feel things are going pretty well for us personally and why not. The economy is humming along pretty well despite an 18-month long correction in the real estate market. Jobs are plentiful, unemployment is at historically low rates and the stock market is at record high returns. With the decline in gasoline prices even fickle consumers are feeling pretty good about the New Year.

The confidence level of the nation's consumers took an upward turn in December, according to a recent report from The Conference Board. The Consumer Confidence Index improved to 109.0 (1985=100) last month, up from 105.3 in November and nearly reaching the last high of 109.8, which was achieved in April. Also in December, the Present Situation and Expectations indexes increased to 129.9 and 95.1, respectively.

Will all the warm fuzzy feelings that we are having about our personal situations jump-start the housing market? Probably, but not until spring. A few BIG IFs, however. If economic expansion continues, IF interest rates remain below 6.50 percent and IF we avoid any natural catastrophes or terrorist attracts. While we are all waiting …………..we should continue to think positive.

Housing is top story for 2006

AP News Service picked housing as their top business story for 2006. Here’s why!
During the first half of the decade, housing cemented its position as a cornerstone of the economy's foundation. Housing, luckily for the economy, took over from dot com technology's spontaneous combustion to become "the psychological equivalent of gold" during the dawn of the new Millennium.

Beginning in the early 2000s, housing headed for the stratosphere, fueled early by those who moved quick enough to trade in fading Wall Street stocks for Main Street holdings. Favorable tax laws, high-leverage loan creativity, baby boomers buying seconds and day traders who became housing market speculators all also gave the residential realty rocket orbital thrust.
Last year, however, accelerated home price appreciation proved unsustainable, sales slipped, speculators split, renters stayed put, builders bolted, foreclosures reached historic proportions in some demographic segments and the inflated bubble of a housing market began to reenter the atmosphere.

It was the sudden reversal of fortunes that led Associated Press' newspaper and broadcast editors to put the housing market at the top of the heap of business stories for 2006, according to the news service.
At the housing market's peak, buyers rushed to open houses, blank checks in hand. Lenders gave big-money mortgages to people who could barely afford their monthly payments. That ended in 2006, when home builders scuttled projects, walked away from land they'd hoped to develop and would-be buyers canceled orders.
The story trumped the high energy price (which, ironically, impacts housing costs) story which had been the top business news story for 2004 and 2005.
"Moody's Economy.com, a private research firm, projected that the median sales price for an existing home will decline in 2007 by 3.6 percent -- the first decline for an entire year in U.S. home prices since the Great Depression," Simon reported.

Other stories at the top included others that could have an impact on the housing market, including, at No. 6, the federal reserve halting rate hikes in light of a soft economy and, at No. 5, the Iraq War's impact on oil prices.
Other top stories included convictions of ENRON CEOs; backdating stock options scandals; auto industry woes; gas prices; Hewlett Packard spying; China's economy; Google stock and YouTube acquisition; sale of Knight Ridder Inc. newspaper chain and deepwater oil finds off the coasts of Louisiana and Texas.


What's in store next for housing is a matter of contention. Some experts say 2006 was the end of the downturn and others say it's just the beginning. Apparently the housing market is as tough to call as is the rest of the economy, with both sending mixed signals. Historically, recession follows a sharp housing downturn, but AP reports economists it queried put the chance of a recession at only slightly better than 1 in 5.
Most economists predict economic growth in the New Year at 2 to 3 percent. New-home starts are expected to have fallen 17.7 percent in 2006 but drop only 9.4 percent next year, according to the National Association of Realtors. Existing-home sales are expected to have fallen 8.6 percent this year and drop 1 percent in 2007.

Mortgage interest rates remained affordable in 2006, rarely getting near the 7 percent some experts predicted. The holidays proved consumers are still spending, employment remains strong and wages are increasing. Lower prices in building materials followed by what's expected to be an upturn in remodeling and home improvement this spring also may be telling indicators. So stay turned as we both watch what happens to the housing market in 2007.

More fees for El Dorado Hills

El Dorado Hills has been getting financially hammered recently from different sources. The new traffic impact mitigation fee affects all new construction in the area. A builder who decides to build a home in the El Dorado Hills will pay $30,000 to the county for traffic impact fees. That is in addition to all normal building and impact fees that could amount to over $70,000.

Last week, the USGS confirmed a earlier report form the federal EPA had issued two years earlier, that El Dorado Hills is built on the state rock, Serpentine, which contains naturally occurring asbestos, a potentially hazardous fiborous mineral that could cause cancer. The state and county now require extensive dust mitigation studies and procedures anytime soil is disturbed in the area.

Now comes a proposal from the El Dorado Hills Community Service District to increase park fees on new single-family homes in order to build more parks. The proposed fee would amount to $15,404 for each new single family home built in the community. Local residents will not have an opportunity to vote on the proposed increase. The new park fee proposal will be decided upon by the Service District, which proposed the increase. I find it humorous that the state and county officials continue to discuss the lack of affordable housing in El Dorado County. They attempt to put the blame on local builders, yet government and not local builders are the most direct cause of the problem.