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Auburn’s state of real estate a ‘perfect storm’

Time running out for city to use $627K in housing grants
By: Jon Schultz, Journal Staff Writer
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At a time when the Auburn real estate market is experiencing a “perfect storm,” the city is hoping to shed some light on its first-time homebuyers program that faces losing its available funding in a matter of months.

Between the program that provides down payment assistance to low-income, first-time buyers and the city’s occupied housing rehabilitation program, Auburn has $627,627 in state funding that, if it is not used or committed to a project by the end of July, will no longer be at its disposal.

In 2011, the state approved Auburn’s application for a HOME Investment Partnership Grant of $487,500 for the first-time homebuyer program and $292,500 for the rehabilitation program.

Only one homebuyer loan has been issued by the city, and it was for $90,000 in August 2012, and of 15 pre-application submissions in 2012, only two prospective buyers followed through and completed the application process. Applicants can receive no more than $140,000.

As to the dropoff from pre-application to a complete submission, Auburn Senior Planner Reg Murray said the city had not followed up with those applicants, but speculated some may have pulled out because they had been unable to find a home to suit their needs.

That happened with some successful applicants the prior year, he said.

And it’s a competitive market for buyers, just ask Dolores Derr, who, in her 80s, is treading the real estate market waters for the first time in 40 years.

“I had no idea it would be as difficult as it is. Everything is gone yesterday,” said Derr, who made a short-sale offer on a home in the Auburn area in January, wanting to move closer to her two daughters. “When I first started looking … we saw some houses, but I was kind of picky, and then it’s gone. You can’t be picky.”

Her real estate agent, Carolyn Metzker of Lyon Real Estate, calls it the “perfect storm.”

Buyers are aplenty with low interest rates and reasonably affordable prices, and sellers are experiencing appreciating values with little competition, creating a “frenzy,” Metzker said.

Derr said it kept her on her toes.

“I go online about four times a day looking for a house even after I made an offer on the short sale, because I can pull out of the short sale,” she said. “As soon as I see (a house), by the time it gets on the computer, it’s gone.”

In the greater Auburn area, 57 single-family homes are on the market – nearly half of what was available in November 2012, according to the most recent data from area Realtor associations.

At the current rate, if no more homes enter the market, it would be exhausted in 1 1/2 months, according to the data.

“It’s not just the under ($400,000) market that is moving, it is the upper-end homes that are moving; the homes that are over $500,000 are going at a very fast pace, too,” Metzker said. “It’s market-wide.”

Auburn home sales have seen an increase in price per square foot by 8 percent from a year ago, the data show.

Metzker said Auburn’s first-time homebuyer program is worth looking into for those weighing their options.

“It’s a great time for buyers to get into the market, and if this helps them get a leg up then by all means definitely,” she said. “But I think it’s important with this loan program and any loan program to understand what the ramifications are and if it’s appropriate.”

The city had the goal of helping four families buy a home, Murray said, and it still has $397,500 remaining in that funding pool.

“For everything that we’ve put into the program, we were hoping it would be better,” Murray said. “But we knew it could be tough.”

If the city is unable to use the remaining funds for the programs, it may be a potential roadblock in getting approved for the grant again in the future, he said, but other cities are experiencing similar challenges.

“It would not surprise me that the state would say, ‘You’re administering a program when things were really tough out there, and maybe having four successful rehabs and getting a home purchased, maybe they will look at that as a good thing,” he said.

The rehabilitation program assisted two owners with a total of $76,873 in loans in 2012.

The city is making one last push to get the word out about the programs, and flyers will be distributed with Recology bills to about 4,000 residences this month, Murray said.

For more information about the city’s first-time homebuyer and occupied rehabilitation programs, or to apply for one of the loans, contact Murray at (530) 823-4211 ext. 140.

 

Jon Schultz can be reached at jons@goldcountrymedia.com. Follow him on Twitter @Jon_AJNews