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Former Gov. Anaya says infusion of federal cash keeps state out of depression

Kate Nash | The New Mexican

More than 8,600 New Mexico teachers, construction workers and police officers kept their jobs or found new employment thanks to the federal stimulus package, says a new quarterly report by the state Office of Recovery and Reinvestment.

Many of the government jobs were in education, and a “significant amount” were in the private sector, according to the report, which was required by the federal government.

That figure only includes a small chunk of stimulus spending in the state so far, and doesn’t include so-called indirect jobs, like concrete suppliers who provide materials for a stimulus-paid construction job, said former Gov. Toney Anaya, who heads the state’s stimulus office.

The Office of Recovery and Reinvestment’s first quarterly report showed that for $77 million in spending through Sept. 30, 8,641 people had at least part-time work, which translated into about 4,100 full-time equivalent jobs, based on a federal formula for job creation that considers how many hours a person worked.

Anaya said the money for jobs and education spending in particular couldn’t have come at a better time.

“We would be literally in a depression in this state if you took away a couple of the impacts of the stimulus,” he said.

While he noted that some people do consider the state’s economy to be in a depression, Anaya said things could be much worse.

“The other impact it’s had that’s hard to measure by the data I’ve been able to put together is we were able to at least temporarily balance the budget … and schools didn’t have to lay people off,” he said.

“It’s been a godsend on many fronts, but it hasn’t been enough to save us from what’s coming.”

What’s coming is a special session of the Legislature, in which lawmakers need to plug a budget hole that could amount to $700 million. Gov. Bill Richardson has already said he plans to use about $91 million in stimulus funding for public schools.

While some have welcomed the money with open arms, others worry about whether it will be here next year to pay for recurring expenditures.

The state is getting stimulus money for everything from airport improvement projects to new roads and energy-efficient traffic lights.

The jobs it has created include work for teacher’s aides, weatherization equipment installers and some summer jobs, among other things. It wasn’t immediately clear how many jobs were saved and how many are new.

That figure is one thing Anaya’s office will sort through as it goes back over data required by the federal government.

That reporting process — required every quarter now — was quite a task, he said.

“What struck me about the reporting process was that it was just a horrendous challenge for the state,” he said. It required just a huge effort on the part of state agencies … I don’t think there’s ever been this kind of a reporting effort on the federal level, ever.”

Overall, the state is expected to receive more than $3 billion from the massive stimulus package. One report said New Mexico would create or save 22,000 jobs, but Anaya said the number could be higher.

The new jobs come as the state is struggling with a rising number of people who are out of work.

New Mexico’s unemployment rate in August was 7.5 percent.

The office also reported spending a total of $370 million in stimulus funds through Sept. 30, including unemployment insurance benefits, food stamps and Medicaid.

New data suggest that foreclosures are rising in more expensive housing markets.

About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006.

The report shows that foreclosures, after declining earlier this year, began to accelerate in the late spring and that more expensive homes have more recently accounted for a growing share of all foreclosures. “The slope of that curve in recent months is much sharper than it was recently,” said Stan Humphries, chief economist for Zillow. Rising foreclosures among more-expensive homes could create added pressure for a housing market that has shown signs of stabilizing in recent months as sales of lower-priced homes pick up.

The Zillow research compared homes against the median values for their local market and broke each market into three tiers by value. Zillow then looked at the share of monthly foreclosures in each tier over the past decade.

Foreclosures are rising in more expensive markets as home values in those areas fall, leaving more homeowners with mortgages that exceed the value of their properties. Prime loans accounted for 58% of foreclosure starts in the second quarter, up from 44% last year, according to the Mortgage Bankers Association. Subprime mortgages accounted for one-third of foreclosure starts, down from one-half last year.

The prime category includes so-called exotic mortgages that were increasingly used to buy more expensive homes, including interest-only mortgages that allowed borrowers to defer principal payments during an initial period. Borrowers often aren’t able to refinance out of these products because the drop in home values has left them with little equity in their homes.

Default rates are particularly high and expected to rise on option adjustable-rate mortgages, which allow borrowers to make minimum payments that may not cover the interest due. Monthly payments can increase to sharply higher levels after five years or when the outstanding balance reaches a certain level. A study by Fitch Ratings found that 46% of option ARMs were 30 days past due last month, even though just 12% of such loans have reset to higher monthly payments.

Zillow estimated that nearly one in four homes with mortgages was worth less than the value of the property at the end of June. Mr. Humphries said he didn’t expect to see foreclosure volumes level off until later in 2010.

Homebuyers key on ‘quality of life’ instead of ‘standard of living’

Dennis J. Carroll | For The New Mexican

10/10/2009 – 10/11/09
Santa Fe home builders, trying to make the most of sales opportunities as first-time buyers rush to meet a tax-credit deadline, are rethinking how they design, market and price their products in the midst of a major attitude adjustment among buyers.

“It’s never going to be the same market again,” said Alan Hoffman, co-founder of Oshara Village and a sales representative for Artistic Homes of Santa Fe, a new builder of homes in the Oshara planned community off Richards Avenue near Santa Fe Community College.

To sustain a recent upturn in sales driven by first-time homebuyers, Hoffman said builders and community developers must recognize that buyers now make a clear distinction between “standard of living” and “quality of life. ”

In buyers’ minds, they no longer are synonymous, Hoffman said.

When it comes to homes, he said, a growing number of consumers now view “standard of living” as referring to expensive amenities including granite countertops, kiva fireplaces and tiled walls. And those amenities are no longer as important to many buyers — especially first-time buyers — as they were in the past.

“It’s a whole new paradigm,” Hoffman said. Homebuyers are more interested in “quality of life” factors, such as “doing what I like,” lower mortgage payments to reduce financial stress, a sense of community with their neighbors, short work commutes (even walking or biking), and having a courtyard or patio for family activities.

Hoffman said buyers are beginning to realize that the “less expensive the home, the more freedom you have. It’s way more about being in a nice community in a reasonably priced home.”

Isaac Pino, general manager of Rancho Viejo Inc., would concur.

“To sell homes in this market, we had to redesign the product,” Pino said. “The homes were too big and too pricey, and people just weren’t buying them.”

At the beginning of 2008, some Rancho Viejo homes could easily be 3,000 square feet and sell for up to $700,000. In the past few months, the new homes have become much smaller — 1,400 to 1,500 square feet, about 500 square feet smaller than the previous average, and prices slashed closer to $200,000, Pino said.

He said sales quadrupled from about three homes a month from January through March to 12 homes a month April through July, with about 75 percent being first-time buyers.

Besides building smaller homes to lower the cost, Rancho Viejo builders switched from in-floor heating systems to forced air. Pino said builders also “managed the product a little tighter,” hunting down lower prices for electrical and plumbing work.

“Now the economy dictates a less expensive home and we have answered that demand by changing our product,” Pino said.

Another Santa Fe builder, Centex, also has redesigned its basic homes, but with less emphasis on reducing amenities or cutting square footage.

“They are not smaller, just designed more efficiently — that allows us as a builder to have less waste in the construction process,” said Jacque Petroulakis, spokeswoman for Michigan-based Pulte Homes, which recently acquired Centex.

She also noted that instead of eliminating creature comforts, the new models actually have more extras — such as air conditioning — than previously.

Petroulakis said Santa Fe Centex homes now range from about $160,000 to near $300,000. She said she could not release sales figures because the company is publicly traded.

Rancho Viejo’s Pino said that many builders, despite their price and design changes, worry that unless Congress renews some version of the tax credit, the uptick in sales will vanish. As though to prove the point, as the backlog of homes was bought out and the number of buyers who can still meet the tax-credit deadline has dwindled, Rancho Viejo sales in August and September slipped back to two or three homes a month.