Elk Grove Housing Market: Is the Elk Grove City Council Going to Repeat History?

By Connie Conley | May 7, 2018 |

After recent articles on Elk Grove News (EGN) regarding the Elk Grove Sphere of Influence (SOI) application before LAFCo, and the rise in the Elk Grove real estate market, the question now becomes: Will the Elk Grove City Council guide real estate property values back into another decline?

As reported on EGN, Elk Grove is currently a seller’s market which is great considering that was not the case years ago. Good news for homeowners right now. However, what happens when the next housing boom in the Southeast Policy Area (SEPA) and the SOI hits? Or worse, when the next housing crash hits which economic theorists say is inevitable? 

Additionally, new to the equation of supply and demand is the changing demographics.  Young home buyers are opting not to “trade-up” because of the cost. This is aided by the fact that the city of Elk Grove’s supply of lower priced, starter homes that appeal to first-time home buyers are practically nonexistent.

Recall thousands of Elk Grove homeowners were devastated by the housing market crash with foreclosures everywhere and we saw a significant rise of rental properties aka pot houses.  Shouldn’t we learn from the past in planning future massive housing projects?  By the looks of it, the Elk Grove City Council clearly has not.

And want to bet the Elk Grove City Council, led by Pat Hume, will fast-track the SOI into an annexation vote so that more housing projects can be built in record time.  Never mind where the home developers are going to get the water – the new liquid gold – to supply tens of thousands of new homes.

Unfortunately, what I believe is going to occur in the future, with the SEPA and the SOI, if the Elk Grove City Council and their developer donors get their way, will make the East Franklin build out look like it took a lifetime.

As a point of reference, the master plan for East Franklin was a 10-year build out.  That would give time for schools and parks to catch up.  However, when the city council saw all the developer big money flooding into their campaign accounts, sped up the housing track approvals and East Franklin built out in four years; parks and schools not so much.  And when the housing market crashed, what area of Elk Grove was hit the hardest?  You guessed it, East Franklin.

What do we have on the horizon?  Look for the developers to fund the annexation vote, most likely matching those amounts in the city council’s campaign accounts to keep them in lockstep.  As the saying goes, “Follow the money.”  We have already seen one developer consultant, Brian Cooley, give Vice Mayor Darren Suen a $10,000 contribution in a nonelection year.  Is Cooley now going to match those contributions to Council members Stephanie Nguyen, Steve Detrick and Hume on behalf of his clients? 

Current Elk Grove Mayor Steve Ly seems to be odd man out because it appears the home developers are going to support Suen for mayor.  On the flip side, Ly will most likely have the support of the big war chest money of the Plumbers and Pipefitters who also have a major stake in the game.   And how many more developers have their checkbooks out eager to match those contributions to guarantee their interests are front and center?  A battle royal for mayor is in the future; but who will really be the actual losers if either Ly or Suen win?  Or will the voters take note, reject both, and elect Tracie Stafford as mayor?

So many times, we have seen housing developers get in and get out, leaving a trail of Mello Roos taxes behind them.  The writing is on the wall, it will happen again as Elk Grove is ripe for the picking and there is no one on the Elk Grove City Council who will get in their way.

If one council member had the courage to speak up, having learned from their past mistakes, keeping their constituents’ property values in mind, works to negotiate a fine balance between supply and demand to ensure home values continue to rise and phase in new housing slowly, that council member would immediately be labeled “anti-growth” and soon, circa 2006, those same developers would form independent expenditure committees and oust that incumbent.

Housing developers are very good at playing the waiting game.  Problem is developers appear to have bounced back from the housing crash with bigger plans for Elk Grove, more than ever before, acquiring vast areas of land in the SOI. 

With that, the developers, with the council members in tow, will suck voters in with their fancy wording on annexation of “long-term stewardship” and “adding value” to existing homes in Elk Grove.  However, it is a fact that oversupply often creates lower prices for existing housing.

Why is all this talk of the SEPA and the SOI so vitally important to homeowners in Elk Grove?  Because most of us saw our home values take a big hit when the housing market crashed.  With that crash, hundreds of homeowners ended up upside down in their mortgages, with short sales and foreclosures following.  Elk Grove homeowners literally cannot afford for the same to occur in the future. 

In closing, here is something for every homeowner to consider:  If the housing market in Elk Grove takes another downturn with supply and demand gone because of the bombardment of new housing projects, who will be at fault?  Would it be the Elk Grove City Council themselves, or would it be the voters because we continue to vote them back into office?

Copyright © 2018 by Connie Conley. All rights reserved.