The Housing Bubble

The Desert Sun reports from California. “Canadians comprise the bulk of foreign buyers in the desert. They typically buy homes during March to May. In 2013 during that period, 375, or 98 percent, of 381 publicly recorded sales had a mailing address from Canada, according to DataQuick. But HK Lane agents Laurie and Tim Briggs have noticed a switch. In the first quarter of 2013, 58 percent of their business came from Canadians, they said. During the same quarter this year, that dropped to 27 percent.”

“Last January, Ed Whinnery and his wife bought a second home in Sun City Palm Desert. The dry desert heat was the perfect escape from the rain of Nanoose Bay, a small town in Canada. Canadian currency was stronger in 2013. Within three weeks that winter, Whinnery and Beckett closed all-cash on a $265,000 home. Whinnery hopes his home will be worth more in a few years. He estimates it’s now worth about $330,000. ‘The exchange is not a big issue,’ Whinnery said. ‘If you can turn around the house, your return on your money here is probably outweighs the exchange you have to pay.’”

The Union Tribune. “Q: Is rising inventory a sign that the housing market is slowing? Murtaza Baxamusa, directs planning and development for the Family Housing Corporation, of the San Diego Building Trades in Mission Valley: ‘No. San Diego has recently experienced the lowest home inventory in three years. Therefore an uptick in inventory is a sign of recovery. Some of the homes appear to be on the market for a longer time because sellers’ expectations for those product types were high. Prices were rising too rapidly last year with cash investors precipitating bidding wars for fewer homes.’”

“Bill Davidson, president of Davidson Communities: ‘Yes. As people begin to feel better about increasing housing prices and overall economy in San Diego County, homeowners have begun to realize the equity in their homes. We see a surge in existing homes coming into the market giving families the opportunity to move up or move down as needed to establish a household affordability equilibrium. In addition, we have seen the residential investor begin to offload some of their portfolios to realize gains.’”

The Los Angeles Times. “This time last year, investment firms raced to buy dozens of single-family homes in neighborhoods from Fontana to South Los Angeles to lease them out. The flood of cash helped spark a steep rise in prices, drawing criticism for pushing families out of the market. But now the firms themselves have all but stopped buying in Southern California. Among the 20 firms buying the most California real estate since January 2012, purchases are down more than 70% compared with last year in each of the last four months, according to DataQuick.”

“‘Prices have gotten to the stage where we cannot buy a house, renovate it, rent it and still make a reasonable return,’ said Peter Rose, a spokesman for Blackstone. ‘There was a moment in time where it made sense. Eventually we’ll exit, whether it’s an IPO or selling them off. But that’s years down the road.’”

The Orange County Register. “Some economists worry that not enough young people are leaving the nest. Whether it’s because of student loans, credit card debt, a foreclosure hangover or a need to save for a mortgage, ‘household formation’ has yet to get anywhere near pre-recession levels. At a time when investors are buying fewer homes, the slow pace of household formation means fewer first-time buyers taking up that slack.”

“Burdened by $85,000 in college debt, attorney Bobby Waltman lives with his mom and grandmother in a three-bedroom house in Huntington Beach, Calif. Now, he’s counting the days until his finances are sound enough to afford a home of his own. ‘I’ve had this plan to move out for a while, and it just keeps getting postponed,’ said Waltman, who works for a Newport Beach, Calif., personal injury firm. ‘I’m working at a really good firm and I’m still living at home, and I figure it’s time I move on. (But) it’s hard to take on a mortgage with law school debt.’”

“A National Association of Home Builders study released last month found that the share of 25- to 34-year-olds living with their parents increased to 19 percent in 2012, from around 12 percent in 1990 through 2005. Those ‘older young adults’ usually account for about half of first-time home buyers, the NAHB said. Waltman said many of his friends still live with their parents, too. ‘When many of your friends are living at home, it’s hard to rationalize moving out,’ he said. ‘I love to travel. I love eating good food. I love to go to concerts and to go out. It’s just easier to do the things I love when I’m not spending money on rent.’ Besides, he added, ‘Mom’s cooking is still the best.’”

The Press Enterprise. “When Donell and Kimberly Davis applied for a mortgage modification on their Eastvale home with Ocwen Financial Corp., they counted on it being a slam dunk. Never late on a payment, the couple with solid work histories and high credit scores spent 30 hours over a two-month stretch to bring payments down on the $520,000 home that saw its equity fall to about $325,000 in the Great Recession before they were told: Modification, denied.”

“‘We still can’t figure it,’ said Donell Davis. ‘When we started the process, they told us everything looked good. I was told I was a good candidate. Now, I feel like I was led along.’”

“Chris Wyatt, left the mortgage and banking industry in 2010 after 21 years in the business to consult on mortgage-related cases. By Wyatt’s calculations, roughly 122,000 of the 185,000 consumers who went through foreclosure by Ocwen during that time will be deemed eligible by the settlement administrator to receive some of the $125 million allocated for relief. Wyatt said the company would need only to modify 3,600 loans in its portfolio to meet the $268 million threshold set for California. ‘That’s not what I would call widespread help for homeowners,’ Wyatt said. ‘Try to get your money, but don’t hold your breath.’”

The Santa Cruz Sentinel. “After a succession of billion-dollar storms, in 2012 Congress took action to fix the Federal Emergency Management Agency’s deficit-laden National Flood Insurance Program, passing a new law that eventually would charge homeowners based on the true risk of flooding in their neighborhoods. Across the county, 1,139 households were looking at 18 percent annual policy increase, while another 531 policies were set to rise 25 percent annually, according to figures compiled by the Associated Press. Hardest hit are the low-lying areas of Capitola Village, where 71 percent of flood policies are facing increases.”

“Lorraine Stucki lives a good six blocks back from a far bend in Salsipuedes Creek, a swift but small tributary of the Pajaro River that hardly seems threatening but can turn unruly in rainy seasons. Now 82 years old, Stucki and many neighbors are facing the prospect of steep increases in their flood insurance premiums, despite a bill signed into law last week by President Obama to ease the burden facing homeowners.”

“There are several ‘For Sale’ signs up in Stucki’s neighborhood, a fact of life in an area populated by seniors. ‘What will eventually happen is these properties will not be salable. Who can sell a home under that?’ Stucki said. ‘I certainly wouldn’t want to try to buy a house in a floodplain anywhere in Watsonville right now.’”

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A reader suggested a topic on why there is no housing bubble. “HA says he can build a complete house for $55/SF, including land, permits, financing, construction costs and profit. If that was true, all these out of work builders would be building millions of houses and selling them, solving the housing cost problem. The average home in the Sacramento market is selling at about $175/SF. Even if you could find a land parcel for $75,000 (which is difficult) and built a 1500 SF house, the land portion alone equals $50/SF before you build the improvements. It is simply not true.”

A reply, “It is not very difficult to figure out that a house is made up of sticks, drywall, electric wiring, insulation, plumbing, ducts and a heating system among other things. The labor rate is $80 to $120 per day in most cases. How can anyone figure out that the cost per square foot for the above will ever reach above $55 per sq ft is beyond me? If someone pays $150 per sq ft fits the expression that there is a sucker born every minute.”

And finally, “I let someone else put in the basic infrastructure a century ago on the Reno I bought for my shop/studio/apartment. I used the old survey. My building permit was $40. The utility put in service and meters for free. My predecessor was a wannabe flipper and tore it down to the sticks literally. Steel roof, wiring and insulation surpassing code, new windows and doors, flooring, drywall, all of it including purchase price about half what HA claims. The Amish work cheap and fast and it is done right. OK, I haven’t put up any trim yet, and I won’t right now because boating season is at the doorstep.”

“When there are millions and millions of empty houses, why anyone would pay for built new at 4x cost is beyond me. Why they would pay some city $50K in permits for the privilege is a box of stupid.”

The Los Angeles Times. “Southern California is home to some of the most overpriced housing markets in the country. Three Southland regions ranked among the five most overvalued markets in the U.S. in a new report by real estate website Trulia. These are places where the housing costs have far outpaced growth in income. ‘Southern California has seen big price increases since the bottom,’ said Jed Kolko, Trulia’s chief economist, ‘without big increases in income.’”

“A number of regions across the West that saw price jumps last year as investors gorged on big inventories of foreclosures. Although incomes are growing — personal income climbed 2.8% in California last year, according to new numbers from the Commerce Department — home prices are growing faster. Prices are up 18.9% in metro Los Angeles from last January, according to S&P/Case-Shiller.”

“Those price gains have largely stopped in recent months, which could give the broader economy time to catch up with the housing market. That’s partly because interest rates have climbed, and partly because investors have pulled back, said Mark Zandi, chief economist at Moody’s Analytics. The housing recovery, he said, needs a new economic engine. ‘The job market has to continue to improve,’ Zandi said. ‘As people are more confident they can hold on to their job, they will start buying more homes.’”

“It also would help if credit eased. After the housing bust, lending standards swung too far in the opposite direction, he said, and that has hurt sales. Lending rules have been a factor even in the last few months, said David Cabot, chief executive at Berkshire Hathaway Home Services California Properties in San Diego. New mortgage rules that took effect in January gummed up some sales while brokers adapted. That may have had some effect on January and February sales.”

“But Cabot sees the spring getting off to a good start, with buyers and sellers both testing the market. ‘We think the spring season should be very healthy,’ he said.”

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It’s Friday desk clearing time for this blogger. “According to a new report published by real estate analytics firm Clear Capital, the national market has at last rebounded from the burst housing bubble, as evidenced by home prices rising within 2 percent of their inflation-adjusted long-run average levels. However, given the current quarterly rate of national growth — 1.2 percent — peak home prices won’t be reached until 2021, per the report. ‘The major finding of this report is that the days of arbitrary increases in the real estate market are gone,’ says Sissy Lappin, principal of Lappin Properties in Houston.”

“One Omaha husband-wife real estate team drops off custom packages to strangers they hope to nudge into moving. A competitor has started hosting office call nights where the mission is to drum up house sellers.Such ramped-up prospecting tactics reflect today’s local housing market where the selection of for-sale homes has hit a 10-year low. Factors keeping sellers at bay in turn have led to a reversal of a nearly three-year growth streak in Omaha-area home sales. ‘This is very unusual,’ said Mike Riedmann of NP Dodge Real Estate. ‘There are not enough listings; buyers are getting frustrated.’”

“What do sales of statues of St. Joseph tell us about the housing market? Broughton’s is the Canadian source for a St. Joseph Home Kit that sells for $10.95. Broughton’s keeps between 200 and 250 kits in stock, and, in its last fiscal year, sold about 1,500. According to Brian Broughton Jr., a sales representative at the Toronto outlet, real estate agents buy them in bulk. Individual home sellers purchase them, as well, notably when they’re having trouble selling their homes. But Mr. Broughton didn’t necessarily see a pattern. ‘When the market crashes, people tend to go back to faith,’ he said.”

“A senior government official has said the housing situation in Macau is ‘not bad,’ disputing complaints that there is not enough housing and that it costs too much. But the head of the Secretariat for Public Works and Transport, Francis Wong Chan Tong, said he understood that people were worried about the future. Statistics and Census Service data show the average price of residential space last year was 81,811 patacas (US$10,226.40) a square metre, 43 percent more than the year before. Mr Wong gave figures to support his assertion about the housing situation. ‘Macau right now has about 185,200 households, while there are nearly 210,000 finished homes here,’ he said.”

“The property market is such a complete mess that nobody could say with any degree of certainty that it has bottomed out. Since the last quarter of 2008, just after the peak of the housing boom, residential property prices have fallen by an estimated 23 per cent. Given the crazy prices at which land and apartments were selling for in 2006 and 2007 a 50 per cent plus decline in values would be a more realistic correction.”

“There is the habit of Cypriots to set a price for a property and refuse to sell for anything less even if there are no buyers at that price; the person would still claim that this was the value of the property. This is set to change over the next few years as the foreclosures begin. Is €700,000 a realistic price to pay for even a luxury 3-bedroom flat in a new block in Nicosia, given the average salaries and the tiny size of the economy? This is Nicosia, not Paris or London. But during the bubble years common sense went out the window.”

“Many of India’s real estate and construction companies — their finances already squeezed by a sharp economic slowdown — are diverting funds from housing and other projects to election campaign contributions. Many projects are stalled, at least temporarily. Meanwhile, potential home owners are seething at the delays in getting possession of properties they have already largely paid for as developers are running out of funds.”

“‘When we went to the site, it was dead. We could count the labourers sitting and relaxing. There was no machinery working and we saw no raw materials that would be used,’ said Ms Ashima, a single mother of two who was expecting to move into her new home in Noida earlier this year, but has now been told it will take another two-and-a-half years. ‘People say India is booming. Where is it booming?’”

“At a site where a planned California escapee has done some research, called Bend, Oregon No. 1 among ‘5 Incredible Places to Live That You Can Afford.’ Site founder Dale Partridge said he lives in Southern California, which some believe is perfect but that his family doesn’t ‘really enjoy it. Sure, the weather is great, but the traffic is insane, the people are rude, and everything is far too expensive.’”

“As usual, commenters on the site pick apart the rankings, with several saying Bend (and others) are not affordable or an ‘incredible’ place to live. ‘Bend is great if you’re retired from Silicon Valley, wear only North Face jackets, shop at REI and Trader Joe’s regularly, and can afford to drop around $400K for a house,’ Aaron writes. ‘Bendme’ chimes in similarly, calling Bend ‘pretty snooty at times and the housing is incredibly overpriced AND there are no jobs!’”

“Flood insurance for Teresa Secord’s modest La Crosse home cost her $525 last year. So when the bank told her she’d have to pay nearly $3,700 this year, she gave them an earful. ‘I told the bank the house was going up for sale. And they said, ‘You’re going to have a hard time selling it,’ Secord said. ‘And I said, ‘Oh, I’m not going to be the one selling it — you are. You can start foreclosure right now ’cause we’re not sticking another dime into the money pit.’ Then I hung up on her.’”

“Tim Lemieux always thought he would buy a condo in Toronto. He visited open houses. He plugged various numbers into mortgage calculators. But even with the down payment, he calculated that he would be almost doubling his monthly expenses with the mortgage, condo fees and property taxes; he now rents a one-bedroom apartment on the subway line for $900. ‘It seemed like I was tying a lot of money down with not much of a living benefit or quality of life benefit,’ says the 40-year-old Toronto resident who works at an insurance company. ‘You have to sell your house [to retire]. That’s everyone’s plan. If you don’t want to sell your house, it puts you in a bind as well. I invest and got a good financial advisor instead.’”

“Even from an investment point of view, David Kaufman, president of Westcourt Capital Corp, believes that your money may work better for you elsewhere. ‘We have 500 years of reliable real estate data and guess what the annual increase is [in real estate value]? It’s exactly the amount of inflation,’ he says. ‘Most people feel better when they own a home or when they think they own it — the bank owns it, right?’”

“Generous incentives including negative gearing and concessions on capital gains tax encourage investment in housing, to the extent that around one in seven Australian taxpayers now owns one or more investment properties. As there is no limit to how many properties local investors can negatively gear. Australia already has one of the highest levels of household debt in the OECD due to borrowings for property purchases, and this is growing fast. Overseas investors are adding to that demand.”

“The upshot is that local and global investor markets are combining to create what is essentially an infinite level of demand. Australian governments need to come to terms with the prospect that no amount of increase in housing supply will meet demand if there is no limit to that demand. The relation is complicated further by the fact that investment properties are often left vacant. Unofficial estimates from the City of Melbourne indicate that up to 90% are owned by investors and that a large number are unoccupied.”

“Last year the BC Globe and Mail ran a story about the closure of a two-year-old store called Green Design in Coal Harbour. The proprietors’ dream of supplying all those condo balconies in need of greening with space-saving wall planters, herbs and pot plants had come to naught, they said, because ‘a hefty share’ of the condos were empty most of the year round. The City of Vancouver estimates that at least 25% of new condos are owned by non-resident investors from less stable economies looking to park their wealth in a safe environment. The Green Design proprietors say these apartments are permanently empty. When the holiday-condos are included, many buildings are more than half empty.”

“High-density, high-rise, high-security and high-cost apartment towers are increasing housing supply, mainly for local and global elites to accumulate capital. A major consequence of the Australian government’s taxation and regulatory regimes regarding housing has been to increase prices by encouraging demand for housing as a commodity, rather than a place to live.”

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A report from the South China Morning Post. “Underdeveloped second and third-tier cities became a magnet for some of the mainland’s biggest developers after 2009, when the authorities started imposing austerity measures in a bid to rein in runaway home prices. The developers were betting that lower land prices and the huge growth potential in such cities could generate attractive returns, but the influx of property investment led to chronic oversupply problems. As a result, developers have been forced to cut prices, some by more than a third in Changzhou, Hangzhou, Nanjing, Ningbo and Qinhuangdao.”

“The South China Morning Post recently visited the two cities where the first price cuts were seen this year: Changzhou in Jiangsu province, and Hangzhou in Zhejiang. To speed up sales, an unprecedented price war broke out among developers in the Changzhou - which media reports have likened to a ghost town - but many buyers stayed out because of fears prices could fall further.”

“Agile Property and Star River took the lead by cutting prices at their luxury project, Star River, by as much as 36 per cent from the previous launch in December to about 7,000 yuan (HK$8,720) per square metre for bare-shell units. The price for furnished units fell 27 per cent to 13,000 yuan per square metre. ‘The Changzhou government immediately ordered Agile to stop the price-cut promotion in order to avert a severe price war,’ said Yang Quanqiao, a director for development at Centaline.”

“However, the developers sidestepped the government’s warning, replacing the ‘price cuts’ mentioned in their promotional materials with ‘huge preferential offers’ instead.”

China Economic Review. “A quick glance at the numbers shows exactly why Chinese developer Zhejiang Xingrun Real Estate went belly up last week. But it’s important to understand how it ended up in the mess in the first place. One problem for capital-strapped developers in the Ningbo area is that private lenders no longer want to lend to highly risky companies. In fact, they are calling in their loans. The value of property in some areas of Fenghua is decreasing and that trend has lowered confidence in developers’ ability to pay dizzyingly high interest rates.”

“Banks aren’t hot on lending to this kind of developer either. Local bank managers are reportedly being told that they may lend to risky borrowers if they wish, but they will be held accountable. High risk is something no one seems willing to stomach these days – in stark contrast to just a year ago.”

“Xingrun’s woes are still the woes of the local authorities. The default will add US$305 million (RMB1.9 billion) to Fenghua province’s non-performing loan portfolio, pushing up the rate of toxic assets to 5.27% and making it Zhejiang province’s most indebted government, according to calculations by The Economic Observer newspaper. Add Fenghua’s problems to those of the greater Ningbo region. The area reportedly has at least six years of housing stock either sitting empty or under construction.”

From Reuters. “Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong and some are knocking up to a fifth off the price for a quick sale as a liquidity crunch looms on the mainland. Wealthy Chinese were blamed for pushing up property prices in Hong Kong, where they accounted for 43 per cent of new luxury home purchases in the third quarter of 2012, before a tax hike on foreign buyers was announced.”

“‘Some of the mainland sellers have liquidity issues … Their companies in China have some difficulties, so they sold the houses to get cash,’ said Mr Norton Ng, Account Manager at a Centaline Property office close to the China border, where luxury homes costing up to HK$30 million (S$4.89 million) have been popular with mainland buyers.”

“In a Hong Kong housing development called Valais, about 10 minutes’ drive from the Chinese border, real estate agents said between a quarter and half of the 330 houses are now on sale. At the development’s frenzied debut in 2010, a third of the HK$30 million to HK$66 million units were sold on the first day, with nearly half going to mainland Chinese.”

“This month, a Chinese landlord sold a 1,300 sq ft unit at the Imperial Cullinan — a high-end estate developed in 2012 — for HK$19.3 million, 17 per cent less than the original price. The landlord told agents to sell the flat as soon as possible, said Mr Richard Chan, Branch Manager at Centaline Property in West Kowloon. ‘In the past two weeks, those who were willing to cut prices were mainland Chinese. It is going to have some impact on the local property market — that’s for sure,’ he said.”

The Standard. “A warning that local interest rates may rise more sharply and sooner than expected - posing downward risk in the homes market - was sounded by the Hong Kong Monetary Authority yesterday. The HKMA estimated that mortgage repayment under a 20-year contract could soar by 30.2 percent if loan rates jump 300 basis points. And income gearing ratio would increase to 83 percent from 64.1 percent.”

“Reflecting concerns, a homeowner at Grand Promenade in Sai Wan Ho sold a 947-square- foot flat yesterday for HK$16.5 million after slashing the asking price by HK$1.5 million.”

The Australian Financial Review. “Beijing’s crackdown on widespread bribery, backhanders and high-level gift-giving have been linked to outcomes as diverse as a sharp drop in Swiss luxury watch sales, a spike in demand for four-star hotels, a surge in Australian property prices and a hike in the prices paid for Chinese art. House prices in Sydney have surged more than 14 per cent in the past 12 months, while Melbourne prices are up 12 per cent. Chinese buyers inject about $5.4 billion per year into the Australian residential property market, Credit Suisse analysts say, and are now ­estimated to be buying up to 12 per cent of new housing supply.”

“Young Chinese professional and prospective Sydney home buyer Stella Lu believes the flow of Chinese investors buying Australian property are split into two camps. Young professionals at one end, and wealthy groups who are prepared to pay whatever cost it takes to secure property, and a safe investment, outside of China. ‘We know some people who are developers and they just come here to buy property without even asking the price,’ she says.”

“Lu was vague on the motivation behind wealthy Chinese moving assets to Australia, but a young Chinese-born agent was prepared to elaborate, on the condition of anonymity. ‘As the government in China tries more and more to find out how people earned their money, they want to move their assets and their money to Australia,’ they say. ‘It’s related to corruption. They think they might want to migrate to Australia, but more than anything they just want to put their money somewhere else outside of China.’”

“Privately, industry members are prepared to be more frank. ‘There’s no doubt there’s this motivation to conceal where they got the money from, through investments offshore,’ an unnamed Melbourne property professional dealing in investment site sales says. ‘It doesn’t mean [all of the investors] are corrupt, it just means China is moving to a more regulated political environment and there’s a lot of caution about.’”

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The Los Angeles Times reports from California. “The overflow from China’s economic high tide is transforming the housing markets of suburban Los Angeles. Affluent Chinese home buyers are driving prices past boom-era peaks, spawning a subset of property brokers and mortgage lenders that cater to their distinct needs. ‘People are getting money out of mainland China and sticking it here,’ said Mel Wong, president of the West San Gabriel Valley Assn. of Realtors.”

“But it’s getting more expensive quickly. Heavy demand pushed the median home sales price past $1.32 million last quarter in Arcadia’s 91007 ZIP Code — 30.5% above its peak in 2007, during the housing bubble, according to DataQuick. Next door in the 91006 ZIP Code, prices are up 23.7%. Other areas with prices exceeding their peaks include Walnut, Temple City, San Marino and parts of San Gabriel and East San Gabriel, all hubs for Chinese investment.”

“The Chinese buying spree sometimes borders on recklessness, said Dominic Ng, chairman of Pasadena’s East West Bank, the largest Chinese-American bank. Unwary buyers accustomed to urban China’s $1-million-plus luxury flats take ‘housing tours’ and snap up homes east of Riverside or in Arizona without considering the cost of property taxes (China has none) or maintenance of homes with pools and yards. ‘They look at the dinky little apartment in Shanghai or Beijing — you know, like one-fifth the size — and they say this is affordable,’ said Ng, who fears prices will appreciate less than the buyers expect. ‘They are buying for speculative purposes.’”

“Others want the prestige of a San Marino or Pasadena mansion, even if paying for it means working in China and rarely visiting. One of Ng’s neighbors bought a Pasadena estate, then lived there for just two days out of the two years that followed. ‘He was not renting it out,’ Ng said. ‘People have so much money, they just say, ‘What the heck. It’s a nice neighborhood. I might as well just buy one.’”

“It’s a story echoed by Patti Hahn of Arcadia, gesturing to the house next door, which sold for $2.45 million last year, up from $1.55 million in 2006, the last time it changed hands. ‘No one lives there,’ Hahn said.”

The San Francisco Business Times. “The troubling news out of China could have an even bigger impact on the Bay Area’s hot housing market. As with the U.S. financial crisis that hit with full force in 2008, the weakest players are the first to succumb. Clearly, the Bay Area’s frothy real estate market is also enjoying a big lift from the gusher of cash flowing into technology startups and the subsequent wealth creation that was on full display this week with Airbnb reportedly hitting a $10 billion valuation, or more than the price being paid to take Safeway private.”

“Tom Perkins, speaking to the Commonwealth Club last month, said plenty to stir controversy. But one of his observations was on the money: the amount of capital flooding into the hands of Bay Area venture capitalists and entrepreneurs is being driven by the Fed’s low-interest-rate policy that pushes everyone to take more risk to generate the returns they need, whether that’s grandma or the managers of grandma’s pension fund.”

“The money coming into Bay Area real estate from China and other countries includes not only the widely publicized deals, but also the world’s wealthy quietly looking for safer places to stash cash. As one real estate expert, commenting on rising condo prices in places like San Francisco and Miami, recently told Bloomberg TV, ‘We’ve become very good at building safe deposit boxes in the sky.’”

The Daily News. “The short supply of homes for sale in the San Fernando Valley eased in February as inventory increased 37 percent from a year earlier. At the end of last month there were 1,419 houses and condominiums listed for sale, up from 1,033 a year earlier, said the Van Nuys-based Southland Regional Association of Realtors. At the current sales pace, that would be enough homes on a market for 3.2 months versus a 1.9 month supply a year ago. That’s the longest amount of time since February 2009.”

“‘The coming months may show that buyers and sellers reassessed the changing market during February,’ association president Roger Hance said in a statement. ‘We’re confident that deep demand for housing will yield increased home sales, although minus the multiple-offer frenzy of 2012 and 2013 and with prices rising at a much slower, unhurried pace.’”

“During February the median price of a Valley house increased 13 percent to $475,000 from $422,000 a year earlier. But the median price fell by $10,000 from January. Sales of previously owned homes dropped 16 percent to 320 from 381 a year ago and fell 8 percent from January. In the Santa Clarita Valley homes sales fell 22 percent to 119 from 153 a year ago. The median house price rose 16 percent to $439,500 from $379,000 a year earlier.”

The Signal. “A California appellate court has ruled in favor of developers planning to build 21,000 homes on the banks of the Santa Clara River and has tossed out a 2012 court decision opposed to the project. The first phase of Newhall Ranch was approved by Los Angeles County supervisors in February 2012 after exhaustive studies. The project calls for developing 422 lots on about 295 acres. That would produce 270 single-family homes, 744 condominiums and 430 apartments.”

The Manteca Bulletin. “Developers are betting Manteca is going to go boom. There are 14,310 housing units either making their way through the approval and entitlement process at city hall or have lots that are ready to build. The housing units on the table have the potential to add more than 40,000 residents to Manteca. The city’s population at the start of the year was estimated at 72,000 by the California Department of Finance.”

The Daily Press. “City Councilwoman Angela Valles stepped up her support this week of a proposed major shift to less-dense housing districts, urging planning commissioners and fellow council members not to ‘bow down to developers and the building industry.’”

“The proposal has been met with staunch resistance by several from within the development industry, including Building Industry Association Baldy View Chapter CEO Carlos Rodriguez. A key outspoken opponent to one of the most controversial components of the proposal — increasing minimum lot sizes for new single-family residential districts from 7,200 to 10,000 square feet — Rodriguez said on Thursday that it could be ‘the most significant proposed change in a quarter of a century in the city of Victorville.’”

“‘All eyes in Southern California are on the city of Victorville right now in the building communities,’ he said, referring to an interested 1,500 or so BIA member companies occupying the lower half of the state. ‘I feel so alone (on the dais),’ Valles said. ‘I have to remember it’s the people that voted me up there. … The BIA is not shy about going after politicians who stand up to them.’ Rodriguez declined to respond to that allegation.”

“Mayor Jim Cox said on Thursday that he didn’t want voting on the recommendation to drag on, but appeared less willing to throw full support behind a 10,000-square-foot minimum standard. Nonetheless, he said larger lot sizes, in general, were the way to go. ‘We have the small lots because of builders in the past (who said) ‘here is a way to build housing for your populous they can afford,’ Cox said. ‘This council does not agree with this. We don’t need to promote low-cost housing, we have an abundance of supply.’”

The Santa Cruz Sentinel. “Buyers are looking but there’s not much to look at. As of the first week in March, there were 455 listings in Santa Cruz County, the fewest in nine years, according to Gary Gangnes of Real Options Realty, who tracks the market. Home prices tend to drop in the winter, but the median, the mid-point of what sold, stayed in the $600,000s this year after reaching $674,444 in November. In February, the median price was $622,500, Gangnes said.”

“Glenn Fuller, a full-time appraiser since 1983, considers interest rates of 4.5 to 4.75 percent ‘a heck of a generous loan.’ Yet, move-up buyers are rare. ‘The availability of money turns out to be a bigger thing than I ever thought,’ Fuller said. ‘Most people are saying, ‘What’s my monthly payment?’ If they raise interest rates, no one will be able to qualify (for a loan).’”

“If he bought a home for $1.3 million, he said, his property taxes would jump from $3,000 a year to over $13,000 a year. ‘Once you get your property taxes set, it makes a lot more sense to remodel your house rather than buy,’ Fuller said.”

“Tom Brezsny, an agent with Sereno Group, recalled how in 2005, the inventory of homes for sale was low, but there was a robust move-up market because it was easy to borrow money. Homeowners would get an equity line of credit to fund a down payment, then shop around. Loans were easy to get, borrowers did not have document employment, assets, and income sources, and once they found the home they wanted, they could easily sell their old house, which was worth more because of rising prices.”

“Those easy money days are gone, homeowners haven’t forgotten how the market blew up and ‘they’re not willing to take the risk,’ Brezsny said.”