Asian Capital Infusion – San Gabriel Valley and Beyond

In recent months, the new home market in Los Angeles has begun to show signs of improvement with increases in absorption rates, higher pricing and improved buyer traffic. These signs are welcome in an unsteady time and can be strongly attributed to the strength of Asian home buyers. You may be wondering, what is special about Asian home buyers?

Cash and lots of it! Whether speaking with sales agents and home builders in Pasadena, Azusa and other cities, it is astonishing to hear the strength of the deals that are being done by Asian buyers and investors. In a survey of actively selling and recently sold out communities, sales agents expressed as many as 1 out of 3 sales to Asian buyers have closed with 50-100% cash down payments. An even larger proportion of sales to Asian buyers have been well in excess of twenty percent cash down payments to purchase homes. As witnessed by Land Advisors Organization, the Asian buyer pool has even begun branching into new home communities in markets that have been traditionally dominated by other ethnic groups including, Northeast Los Angeles and the San Fernando Valley.

With such a strong influence on the new home market, builders that design communities to meet the needs and desires of the Asian demographic have seen above market pricing, brisk absorption and incredible buyer satisfaction.

In addition, Asian investors have been a strong source of capital infusion via the EB-5 financing program. The program allows Overseas investors receive a green card and get on a fast track to US citizenship upon investing $500,000 into a venture that creates jobs. Each $500,000 investment qualifies for one green card if it creates ten Jobs. Hospitals, Assisted living and Hotels are popular investment due to the high number of jobs created, but residential developments are also being regularly financed through the EB-5 program as well.

The following articles both highlight the strength and demand occurring in the San Gabriel Valley and surrounding parts of Los Angeles from Asian home buyers and investors.

http://speakingofrealestate.blogs.realtor.org/2011/04/25/asian-wealth-adds-up-to-u-s-home-sale-boom/

http://www.usatoday.com/money/economy/housing/story/2012-04-03/us-homes-lure-chinese-buyers/53977638/1

Within the past three months, the Los Angeles Infill Team at Land Advisors has marketed three deals in the San Gabriel Valley and continues to see a strong desire for builders and developers to acquire new communities in this area.

For information regarding available deals and market data, please contact Chris Gomez-Ortigoza, Tim Barden or Richard Byrd at (626) 376-9840.

Source: Chris Gomez-Ortigoza, Marketing Consultant

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Let’s Make a Deal in the Bay Area – Door #1 or Door #2?

While the land market in the Bay Area has continued to improve and in many primary in-fill areas the market is back within 20% of peak values, the secondary and tertiary markets are still bouncing along the bottom with land values that are typically only 20% of peak values. This seems to be an unsustainable condition. Back in 2003 or 2004 when land prices in the Bay Area were approximately where they are today, land in outlying markets (think the cities of Brentwood and Gilroy, for example) was consistently trading for 2 to 4 times what it is trading for today.

So it seems that the market is at an inflection point, either the 2,000+ units per year that all the public and large private homebuilders combined in Northern California need to produce to cover their fixed costs are going to come in the form of 50 lot and smaller infill developments (Door #1), or the outlying Bay Area land markets are set for a major rebound. Maybe it’s time to see consider what kind of deals you can find behind Door #2.

Source: Steve Reilly, Marketing Consultant, (925) 368-3128

Play Ball in Western Riverside County!

You win some…

The second quarter of 2012 is in the books in West Riverside County and public home builder sentiment is high nationally and locally. Our hopes are that the positive sales pace continues through the second half of the year which should lead to the first inning in what we hope is a long overdue, extra-inning recovery. In addition to that, according to Hanley Wood data for the second quarter, 10 of 13 active new home markets in West Riverside County experienced an increase in new home sale pricing. That’s the good news.

You lose some…

The bad news is that 2012 has yielded few land transactions to discuss because land bank REO properties have been purged from the market (currently LAO has listed one of the few remaining portfolios of bank REO assets, contact if interested) and land values are generally not yet at a level where the 2008-2010 investors would sell. If the market continues to improve however, 2013 should see a number of sales from the investor community to home builders.

Source: Mitch Casillas, Marketing Consultant, (949) 852-8288 ext. 23