Bay Area Home Investors Driving Up….

Bay Area investors, commuters driving up San Joaquin Valley home prices

 

Published: Monday, Sep. 23, 2013
GIFN5LUQ.6Staff Photographer

Bart Ah You / The Modesto Bee

In the housing bubble of 2004 and 2005, Stanislaus County’s median peaked at $396,000

Bay Area investors and long-distance commuters are hitting the road again and bidding up home prices in the Northern San Joaquin Valley,which until recently was the epicenter of the nation’s housing market collapse.

Stockton, which became a Wall Street punchline in the housing boom and filed for bankruptcy protection after the bust, has seen its medianhome price rise by 30 percent in the past year, according to DataQuick.

Tracy, a burgeoning bedroom community for Bay Area “super commuters” in the boom, experienced a nearly 40 percent gain in the median home price from August 2012 to August 2013, the San Diego-based real estate information service said.

And Lathrop, a former farm town that sprouted roomy, suburban-style houses, saw its medianhome price soar by nearly 50 percent, one of the biggest increases in the nation.

While prices in the San Joaquin Valley remain far below their boom-era peaks, “you have an eye-poppingly high gain,” said DataQuick analyst Andrew LePage.

From August 2013 to August 2013, the city of Sacramento experienced a nearly 40 percent rise in its median home value, DataQuick figures show.

Experts said the same factors that have driven up Sacramento-area home prices in the past year – heavy investor activity, record low mortgage rates and tight inventory – are at work from Stockton to Modesto. But those areas also are seeing a growing number of buyers from the Bay Area, where homes cost two or three times as much as homes in inland areas.

“Especially Tracy, Lathrop and Manteca have really felt the Bay Area influence coming out,” said Aaron West, an agent with PMZ Real Estate in Modesto. Prices fell so low the the homes looked like bargains compared with the rent they would generate, he said.

At first, the buyers were professional investors scooping up cut-priced homes 10 at a time, he said. Then came some Bay Area residents who wanted to buy one or two rental homes. Now, with prices rising fast in the Bay Area, homeowners are once again driving across the Diablo Range to seek out homes they can afford, he said.

West said he expects prices to continue rising because there is more buyer demand than supply. Few new homes have been built in Northern California’s inland communities since the market crashed in 2007, he said.

“Until the new home builders really start building in force, there just aren’t enough homes for the amount of qualified buyers that are out there,” West said.

In the housing bubble of 2004 and 2005, Bay Area commuters, speculators and local buyers – many using subprime loans – pushed prices in the Northern San Joaquin Valley beyond all reason. Houses in some Valley towns sold for $800,000 or more before plummeting in value by more than half.

Stockton’s median home price reached $370,000 in 2005. Jobs in the largely blue-collar city couldn’t support such prices over the long term.

“I don’t think you’ll find anywhere that the bubble was inflated as much as it was in Stockton,” said Jeffrey Michael, head of the Business Forecasting Center at the University of the Pacific in Stockton.

City leaders relied on a sustained housing boom and surging tax revenues to fund waterfront redevelopment and generous pay and benefits packages for public employees and retirees.

Meanwhile, Wall Street traders joked that Stockton was a “subprime nirvana” that helped pioneer the so-called NINJA mortgage, which stood for “no income, no job, no assets,” Lawrence McDonald, a vice president at Lehman Brothers wrote in his book “A Colossal Failure of Common Sense.” Lehman Brothers, one of Wall Street’s biggest investment banks, collapsed in 2008 under the weight of failing subprime mortgages.

When home prices came crashing down in Stockton, the city became America’s foreclosure capital. Developer fees and property taxes dried up. Last year, the city of 300,000 became the largest to declare bankruptcy until Detroit filed for Chapter 9 protection in July.

“The primary driver of Stockton’s bankruptcy,” Michael said, “was the housing collapse combined with a city that made a lot of risky and poor financial decisions.”

The median home price in Stockton fell to less than $115,000 in early 2012, DataQuick reported. In August, the median sales price was $155,000 – 30 percent higher than the same month a year ago but still nearly 60 percent lower than the peak of 2005.

Such low prices, combined with today’s ultra-low mortgage rates, make it more affordable to buy than to rent and have drawn would-be homeowners despite the stigma of the city’s bankruptcy, Michael said. Rising home prices will help boost city revenues, but “it’s not the cavalry that’s going to save the city from bankruptcy,” he said.

South of Stockton, areas such as Tracy, Manteca and Lathrop still make sense as communities where Bay Area workers can afford large suburban homes on middle-class salaries, even if it means a lengthy commute. Median home prices there are now in the $250,000 to $350,000 range after soaring above $450,000 in the boom years.

While home prices in those areas became “unhinged from reality,” it wasn’t irrational for Bay Area buyers to want to move there, Michael said. The cities are connected by interstate highways to the much pricier Bay Area via the Altamont Pass.

“That’s why driving over the pass doesn’t look so bad to people,” Michael said.

 

 

 

 

 

Bay Area investors and long-distance commuters are hitting the road again and bidding up home prices in the Northern San Joaquin Valley,which until recently was the epicenter of the nation’s housing market collapse.

Stockton, which became a Wall Street punchline in the housing boom and filed for bankruptcy protection after the bust, has seen its medianhome price rise by 30 percent in the past year, according to DataQuick.

Tracy, a burgeoning bedroom community for Bay Area “super commuters” in the boom, experienced a nearly 40 percent gain in the median home price from August 2012 to August 2013, the San Diego-based real estate information service said.

And Lathrop, a former farm town that sprouted roomy, suburban-style houses, saw its medianhome price soar by nearly 50 percent, one of the biggest increases in the nation.

While prices in the San Joaquin Valley remain far below their boom-era peaks, “you have an eye-poppingly high gain,” said DataQuick analyst Andrew LePage.

From August 2013 to August 2013, the city of Sacramento experienced a nearly 40 percent rise in its median home value, DataQuick figures show.

Experts said the same factors that have driven up Sacramento-area home prices in the past year – heavy investor activity, record low mortgage rates and tight inventory – are at work from Stockton to Modesto. But those areas also are seeing a growing number of buyers from the Bay Area, where homes cost two or three times as much as homes in inland areas.

“Especially Tracy, Lathrop and Manteca have really felt the Bay Area influence coming out,” said Aaron West, an agent with PMZ Real Estate in Modesto. Prices fell so low the the homes looked like bargains compared with the rent they would generate, he said.

At first, the buyers were professional investors scooping up cut-priced homes 10 at a time, he said. Then came some Bay Area residents who wanted to buy one or two rental homes. Now, with prices rising fast in the Bay Area, homeowners are once again driving across the Diablo Range to seek out homes they can afford, he said.

West said he expects prices to continue rising because there is more buyer demand than supply. Few new homes have been built in Northern California’s inland communities since the market crashed in 2007, he said.

“Until the new home builders really start building in force, there just aren’t enough homes for the amount of qualified buyers that are out there,” West said.

In the housing bubble of 2004 and 2005, Bay Area commuters, speculators and local buyers – many using subprime loans – pushed prices in the Northern San Joaquin Valley beyond all reason. Houses in some Valley towns sold for $800,000 or more before plummeting in value by more than half.

Stockton’s median home price reached $370,000 in 2005. Jobs in the largely blue-collar city couldn’t support such prices over the long term.

“I don’t think you’ll find anywhere that the bubble was inflated as much as it was in Stockton,” said Jeffrey Michael, head of the Business Forecasting Center at the University of the Pacific in Stockton.

City leaders relied on a sustained housing boom and surging tax revenues to fund waterfront redevelopment and generous pay and benefits packages for public employees and retirees.

Meanwhile, Wall Street traders joked that Stockton was a “subprime nirvana” that helped pioneer the so-called NINJA mortgage, which stood for “no income, no job, no assets,” Lawrence McDonald, a vice president at Lehman Brothers wrote in his book “A Colossal Failure of Common Sense.” Lehman Brothers, one of Wall Street’s biggest investment banks, collapsed in 2008 under the weight of failing subprime mortgages.

When home prices came crashing down in Stockton, the city became America’s foreclosure capital. Developer fees and property taxes dried up. Last year, the city of 300,000 became the largest to declare bankruptcy until Detroit filed for Chapter 9 protection in July.

“The primary driver of Stockton’s bankruptcy,” Michael said, “was the housing collapse combined with a city that made a lot of risky and poor financial decisions.”

The median home price in Stockton fell to less than $115,000 in early 2012, DataQuick reported. In August, the median sales price was $155,000 – 30 percent higher than the same month a year ago but still nearly 60 percent lower than the peak of 2005.

Such low prices, combined with today’s ultra-low mortgage rates, make it more affordable to buy than to rent and have drawn would-be homeowners despite the stigma of the city’s bankruptcy, Michael said. Rising home prices will help boost city revenues, but “it’s not the cavalry that’s going to save the city from bankruptcy,” he said.

South of Stockton, areas such as Tracy, Manteca and Lathrop still make sense as communities where Bay Area workers can afford large suburban homes on middle-class salaries, even if it means a lengthy commute. Median home prices there are now in the $250,000 to $350,000 range after soaring above $450,000 in the boom years.

While home prices in those areas became “unhinged from reality,” it wasn’t irrational for Bay Area buyers to want to move there, Michael said. The cities are connected by interstate highways to the much pricier Bay Area via the Altamont Pass.

“That’s why driving over the pass doesn’t look so bad to people,” Michael said.

 

Bay Area investors and long-distance commuters are hitting the road again and bidding up home prices in the Northern San Joaquin Valley,which until recently was the epicenter of the nation’s housing market collapse.

Stockton, which became a Wall Street punchline in the housing boom and filed for bankruptcy protection after the bust, has seen its medianhome price rise by 30 percent in the past year, according to DataQuick.

Tracy, a burgeoning bedroom community for Bay Area “super commuters” in the boom, experienced a nearly 40 percent gain in the median home price from August 2012 to August 2013, the San Diego-based real estate information service said.

And Lathrop, a former farm town that sprouted roomy, suburban-style houses, saw its medianhome price soar by nearly 50 percent, one of the biggest increases in the nation.

While prices in the San Joaquin Valley remain far below their boom-era peaks, “you have an eye-poppingly high gain,” said DataQuick analyst Andrew LePage.

From August 2013 to August 2013, the city of Sacramento experienced a nearly 40 percent rise in its median home value, DataQuick figures show.

Experts said the same factors that have driven up Sacramento-area home prices in the past year – heavy investor activity, record low mortgage rates and tight inventory – are at work from Stockton to Modesto. But those areas also are seeing a growing number of buyers from the Bay Area, where homes cost two or three times as much as homes in inland areas.

“Especially Tracy, Lathrop and Manteca have really felt the Bay Area influence coming out,” said Aaron West, an agent with PMZ Real Estate in Modesto. Prices fell so low the the homes looked like bargains compared with the rent they would generate, he said.

At first, the buyers were professional investors scooping up cut-priced homes 10 at a time, he said. Then came some Bay Area residents who wanted to buy one or two rental homes. Now, with prices rising fast in the Bay Area, homeowners are once again driving across the Diablo Range to seek out homes they can afford, he said.

West said he expects prices to continue rising because there is more buyer demand than supply. Few new homes have been built in Northern California’s inland communities since the market crashed in 2007, he said.

“Until the new home builders really start building in force, there just aren’t enough homes for the amount of qualified buyers that are out there,” West said.

In the housing bubble of 2004 and 2005, Bay Area commuters, speculators and local buyers – many using subprime loans – pushed prices in the Northern San Joaquin Valley beyond all reason. Houses in some Valley towns sold for $800,000 or more before plummeting in value by more than half.

Stockton’s median home price reached $370,000 in 2005. Jobs in the largely blue-collar city couldn’t support such prices over the long term.

“I don’t think you’ll find anywhere that the bubble was inflated as much as it was in Stockton,” said Jeffrey Michael, head of the Business Forecasting Center at the University of the Pacific in Stockton.

City leaders relied on a sustained housing boom and surging tax revenues to fund waterfront redevelopment and generous pay and benefits packages for public employees and retirees.

Meanwhile, Wall Street traders joked that Stockton was a “subprime nirvana” that helped pioneer the so-called NINJA mortgage, which stood for “no income, no job, no assets,” Lawrence McDonald, a vice president at Lehman Brothers wrote in his book “A Colossal Failure of Common Sense.” Lehman Brothers, one of Wall Street’s biggest investment banks, collapsed in 2008 under the weight of failing subprime mortgages.

When home prices came crashing down in Stockton, the city became America’s foreclosure capital. Developer fees and property taxes dried up. Last year, the city of 300,000 became the largest to declare bankruptcy until Detroit filed for Chapter 9 protection in July.

“The primary driver of Stockton’s bankruptcy,” Michael said, “was the housing collapse combined with a city that made a lot of risky and poor financial decisions.”

The median home price in Stockton fell to less than $115,000 in early 2012, DataQuick reported. In August, the median sales price was $155,000 – 30 percent higher than the same month a year ago but still nearly 60 percent lower than the peak of 2005.

Such low prices, combined with today’s ultra-low mortgage rates, make it more affordable to buy than to rent and have drawn would-be homeowners despite the stigma of the city’s bankruptcy, Michael said. Rising home prices will help boost city revenues, but “it’s not the cavalry that’s going to save the city from bankruptcy,” he said.

South of Stockton, areas such as Tracy, Manteca and Lathrop still make sense as communities where Bay Area workers can afford large suburban homes on middle-class salaries, even if it means a lengthy commute. Median home prices there are now in the $250,000 to $350,000 range after soaring above $450,000 in the boom years.

While home prices in those areas became “unhinged from reality,” it wasn’t irrational for Bay Area buyers to want to move there, Michael said. The cities are connected by interstate highways to the much pricier Bay Area via the Altamont Pass.

“That’s why driving over the pass doesn’t look so bad to people,” Michael said.

 

 
 
 
 
 
 
 
 
 

Read more here: http://www.sacbee.com/2013/09/23/5759277/bay-area-investors-commuters-driving.html#storylink=cpy

 

 

Home Equity Rises Across Sacramento…

Home equity rises sharply across Sacramento region

 

Published: Tuesday, Sep. 10, 2013 – 8:54 pm
Last Modified: Thursday, Sep. 12, 2013 – 9:20 am
 

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Jose Luis Villegas / jvillegas@sacbee.com

The most underwater neighborhood in the entire Sacramento region is the Sunrise-Douglas area in Rancho Cordova.

 

The flood of underwater mortgages that swamped the Sacramento region during the housing collapse receded at a rapid rate this spring as home prices rose, CoreLogic reported Tuesday.

The Santa Ana-based real estate information service said the number of area homeowners with mortgages who owed more than their homes were worth plunged to 18 percent in April, May and June compared to more than twice that figure during the same months last year.

There were 86,500 upside-down mortgages in the region at the end of the second quarter of this year, the firm said. The number was down dramatically from even the first few months of 2013, when almost 124,000 area mortgages were underwater.

The reason: Home prices have risen sharply because of strong buyer demand and a tight supply of homes for sale.

In June, for instance, home prices across Sacramento, Placer, El Dorado and Yolo counties rose by almost 26 percent from June 2012, CoreLogic said. July posted similar gains compared with the same month a year before, it said.

“It’s a historic bounce back we many never see again in our lifetimes,” said Pat Shea, president of Lyon Real Estate in Sacramento.

The region’s home prices rebounded from a low point in early 2012 when they were undervalued to the point that investors, and then traditional homebuyers, swept in to purchase houses. Record-low interest rates fueled demand.

The prices and rates created a perfect storm for a mass return of equity.

“Anyone who was 25 percent or less underwater no longer is,” said Jeff Michael, economist at the University of the Pacific in Stockton. For those who were severely upside down on their mortgages, “short sales and foreclosures have taken many underwater mortgages out of the system,” he said.

CoreLogic said another 15,000 Sacramento-area homeowners were close to regaining equity in their homes at the end of June.

The region’s experience mirrored a nationwide trend in the second quarter, when approximately 2.5 million residential properties returned to positive equity, the data firm said. That left about 7 million homes, or 14.5 percent of all residential properties with a mortgage, still in negative equity at the end of the quarter, it said.

“Price appreciation obviously had a positive impact on home equity over the first half of 2013, especially the second quarter,” Anand Nallathambi, president and CEO of CoreLogic, said in a news release.

The rapid rise in home prices in the Sacramento area and elsewhere is expected to slow now that the traditional spring and summer buying season has ended.

“In just the first half of 2013, almost 3 1/2 million homeowners have returned to positive equity, but the pace of improvement will likely slow as price appreciation moderates in the second half,” Mark Fleming, CoreLogic’s chief economist, said in the news release.

Shea said a greater inventory of homes for sale will help stabilize the Sacramento region’s market, and he expects sales to continue at a decent clip.

Prices remain affordable compared with the excesses of last decade’s housing boom, and interest rates are rising but remain well below historic averages.

As more homeowners emerge from underwater, Shea said, many will want to move to a bigger or smaller house or to a different location, having felt trapped for years.

Without equity in their homes, and the ability to sell, Shea said, “people have been handcuffed."

 

 

Housing prices lift 2.5 million homes out of negative equity.

Housing Prices Lift 2.5 Million Homes Out of Negative Equity

Rent Vs. Buy: Six Questions Newlyweds Need to Ask

This is a great article that I have shared with others!

House of Brokers Realty, Inc.

The newlywed year is full of milestones including, of course, your first married home together.

Rent vs. Buy: Advice for Newlyweds

It is often a natural step many couples take after tying the knot, but choosing whether to rent or buy is an important decision that needs to be made together. There are some major lifestyle factors that impact that choice.

When you are ready to have a serious conversation about your future home, set up a date with each other either at home or in a place where you can talk quietly and at length. Turn off your phones and other distractions so that you can truly focus. The six questions below are conversation starters to help you evaluate whether or not now is the right time for you to look at buying a home.

1) Where do we see ourselves in the next five years? If you are planning to move to another state…

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“Dirt” In Demand….

'Dirt' again in demand as housing recovers

 

Published: Sunday, Sep. 8, 2013
 
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Tim Gruber The New York Times Movers carry furniture into a newly built home in Otsego, Minn. The recovering housing market has sent land-hungry builders to suburbs like Otsego, located 30 miles from downtown Minneapolis, where new developments are bordered by cornfields.

MINNEAPOLIS – A few months ago, Michael N. Felix's phone started ringing again after four years of silence. Felix is a land broker whose business dried up when the housing marketcrashed.

But with home prices now rising faster than anyone expected, builders are again looking for what, in the land trade, is referred to as dirt.

Already, developers report that the cost of land in the most desirable areas is double what it was two years ago.

At least three golf courses in the Minneapolis-St. Paul area are being carved into millions of dollars' worth of residential lots.

The race has even sent builders back to outer suburbs like Otsego, located 30 miles from downtown Minneapolis, where bulldozers are laying the groundwork for four-bedroom houses with three-car garages, in subdivisions that are bordered by cornfields.

"Lot buyers and sellers!!!!!!!!" Felix's website reads. "It is time to get moving again….!"

Or past time. The latest land rush is in full swing, as developers realize that they have failed to feed the zoning, permitting and platting pipeline, which can take months or years to turn raw fields into buildable lots.

They are realizing another thing, too: They have been sorely missed.

"For the first time, I've seen cities want to work to help figure it out, rather than doing us a favor all the time to let us develop," said Scott Carlston of Hunter Emerson, a development partnership.

Hunter Emerson won a victory when the city of Eagan, a suburb of Minneapolis, allowed Parkview Golf Club to be converted into a high-end single-family subdivision.

The hunt for dirt is not limited to the Twin Cities. After builders across the country spent decades feeding acre after acre of raw land into the maw of demand for single-family homes, the housing crash left them with a land surplus so large that lots were selling for pennies on the dollar.

At the peak of supply, in 2009, there were enough lots to last almost eight years, according to MetroStudy, a firm that tracks housing data.

Now there is less than four years' worth, and only about a quarter of that is in the more desirable A- or B-rated locations.

"We have gone from a situation where five years ago everyone was saying, 'There's too many lots,' to today, builders are literally crying on our shoulder saying, 'There's not enough lots. We can't find any,'" said Bradley Hunter, the chief economist at MetroStudy.

The shortage of lots is slowing the housing recovery, the National Association of Home Builderssaid last week. In August, 59 percent of builders surveyed reported that lot supply was low or very low, the association said.

Housing is a critical driver for the economy, not just because of the jobs and supplies needed to build homes but also the appliances and furnishings that new occupants purchase.

At the peak of the housing boom, builders were finishing more than 1.6 million single-family houses a year. That number plunged to less than half a million during the recession. This year, the industry is on track to complete more than 570,000 homes, still substantially below the level considered necessary to replace aging homes and provide for new households.

A return to more normal rates of construction would substantially lift the economy's anemic growth rate of about 2 percent over the past year.

Carlston said that some cities in the Twin Cities area had adjusted their rules to allow fewer parking spaces or smaller lots.

Otsego has lowered some of its development fees and allowed a developer to change an approved plan so that a partly built town house project could be finished with more salable detached homes.

Rick Packer, a land development manager for Centra Homes, said some suburbs were relaxing requirements that homes be made of brick or stucco.

Even the Sierra Club, which once placed Minneapolis among the top 10 sprawl-threatened cities, has backed off a bit. An annual bike ride by the local chapter, once known as the "Tour de Sprawl," has been given a less pejorative name and refocused to include not just threatened green space but what the group considers model development and transportation projects.

Mayor Mike Maguire of Eagan, a co-chairman of the Regional Council of Mayors Housing Initiative, said one reason his city had approved a land-use change for the golf course was that so little new housing was built in the past few years.

"When there's no new development, you have stock that's increasingly out of date and that tends to bring your home values down," he said. "That was one of the things we were hearing back from Realtors, was they had people who wanted to move to Eagan but couldn't find the home they wanted."

In 2012, Hunter Emerson agreed to pay $8.6 million for the golf course, wagering that the city would approve the land use change. The partnership sold the property to a national home builder for $13.1 million, Carlston said. The houses built on it will cost from $400,000 to $700,000, he said.

The excess left from the boom – land in various stages of development ranging from untouched to what builders call PVC farms, named for the hard plastic plumbing pipes that, with electrical lines, were virtually all that was on the lots – is quickly being absorbed.

Developers have gone from buying foreclosed acreage from banks to buying from farmers, family trusts, manufacturers and even homeowners with outdated homes on single lots.

"What we've seen is the inner ring of the suburbs, all those areas have come back," said Rod Just of Key Land Homes, a Twin Cities builder. "The outer ring, they've taken just a little bit longer because of gas prices, but they're going to come back."

 

 

 

 

 

Folsom, affordable housing advocates settle long-running feud…

Folsom, affordable housing advocates settle long-running feud

 

Published: Friday, May. 10, 2013 – 5:28 pm
Last Modified: Sunday, May. 12, 2013 – 3:01 pm

After years of legal wrangling, Folsom has settled a long-running dispute with affordable housing advocates over how much new development must serve low-income residents.

The settlement, which housing advocates made public this week, requires developers to set aside 10 percent of new projects for low-income housing, down from the previous 15 percent threshold that had been in dispute.

City officials are hailing the agreement as a victory for both sides.

"We hit a sweet spot here that worked," said David Miller, Folsom's community development director.

At issue was whether the City Council's decision in 2011 to scrap its affordable housing ordinance altogether was legal. The Sacramento Housing Alliance believed it wasn't and got a Superior Court judge to agree.

"We feel vindicated. This wasn't a frivolous lawsuit," said Bob Erlenbusch, executive director of the Sacramento Housing Alliance.

Folsom appealed the ruling but also made overtures to settle the case out of court. The pro-growth city once decried any requirement of affordable housing as an impediment to new development.

Under the March 22 settlement, the affordable housing requirement will stay, though the makeup of low-income units will change. Three percent will be allocated to very low income – which requires greater subsidies – down from 10 percent in the old ordinance. As a result, developers will pay far less, which city leaders say is the first step toward promoting new growth.

"I did an awful lot of diplomacy with the building community to make this happen," Miller said, noting that developers have long resisted subsidized housing.

The city also agreed to a few other concessions, including a $15,000 grant toward construction of a low-income complex.

Housing for low-income residents historically has been out of reach in the sprawling Sacramento County suburb.

The average price for a rental apartment in Folsom increased from $1,176 in 2008 to $1,253 in 2012 – a 6.5 percent change, according to apartment data tracker RealFacts. During the same period, the average rental rate in the Sacramento metropolitan area dropped 1 percent.

Miller said the city remains committed to its low-income residents and touted an 80-unit affordable complex currently under construction on Sibley Street as a showcase of that commitment.

The agreement with affordable housing advocates comes on the heels of a major recovery in the Folsom housing market. The city has issued 62 building permits so far this year, more than the number in 2010 or 2011. Miller expects more than 300 single-family homes will be built in 2013 alone.

"We have a very robust recovery," he said.