PHOENIX, AZ - Former Housing Secretary Henry Cisneros says he is more optimistic than most observers in predicting that the collapsed housing market will show signs of a recovery by year's end. Cisneros, in town Tuesday to address an apartment-development conference, said the cumulative effect of the $800 billion federal stimulus package and private-sector investment will lead to a turnaround in housing next year.
"But we still have more setbacks to work through," said Cisneros, U.S. Housing and Urban Development secretary under President Bill Clinton. "That includes commercial real estate, which looks grim right now."
Cisneros, who has moved to the private sector, is chairman of Los Angeles-based CityView, which invests institutional capital in affordable, urban housing.
He was in the Valley to tour a north Phoenix condo-conversion complex at Tatum Ranch and to deliver a keynote speech at the Apartment Finance Today Conference at the Arizona Biltmore Resort.
CityView invested in the 168-unit Terra Vista complex in 2007 when the P.B. Bell Cos. started to convert the apartments to condos just as the market cooled for condo conversions. It has sold 86 condos and is leasing the other units. CityView, with investments in 7,000 homes in 12 states, looks for investments that offer affordable housing for working families, Cisneros said.
Terra Vista, built in 2000, is priced starting at $139,900 and includes a lease-purchase program that helps turns renters into buyers.
That includes Julie Russell, 34, a swimming instructor and golf-course worker, who is in a lease-purchase condo at Terra Vista that the former housing secretary visited.
"I feel like my money is staying with me at the end of the day," Russell said of her lease payments.
Terra Vista will use $5,000 of Russell's first-year payments for a down payment on the condo. She is also eligible for an $8,000 federal tax credit as a first-time buyer.
Cisneros, HUD secretary from 1993-97, said Terra Vista is offering the kind of program that is helping working families and people like Russell build equity in their homes. He defended the Clinton administration's efforts to loosen credit requirements to make ownership accessible for more Americans.
That led to the home ownership rate growing from about 64 percent in 1993 to 69 percent by the end of Clinton's second term, Cisneros said.
"Those efforts we hijacked by unscrupulous companies that had no goal of creating ownership or equity for buyers," he said. "They were all about ambition and greed, and perverted the system."
Cisneros, former San Antonio mayor, said there is a growing need for apartment development to keep pace with immigrants and others who are not ready for home ownership.
There is a backlog in demand for about 5 million apartment units but there is little funding available to build them, he said.
Chapin Bell, P.B. Bell Cos. president, said financing for apartment development dried up in the middle of 2008. That will slow development in the Valley from about 6,500 units this year to 1,400 next year, Bell said.
Source: AZcentral.com