It sounds sophisticated — like something whispered in back rooms by finance guys wearing French cuffs. But really, it’s simple: leverage means using someone else’s money to buy something you couldn’t afford on your own.

That “someone else” is usually a lender, and the “something” is typically real estate. Whether you’re buying an industrial building, an office condo or a strip retail center, leverage is the reason you don’t need a million bucks in the bank to make it happen.

Let’s walk through it, and then I’ll explain why it’s both powerful and dangerous.

How leverage works

Say you find a building you want to buy. It’s priced at $2 million. You could write a check — if you happen to have a spare $2 million lying around. But most investors don’t.

So you approach a lender. The lender agrees to loan you 65% of the purchase price, or $1.3 million. That means you need to bring $700,000 to the table. With that $700,000, you now control a $2 million asset. That’s leverage.

Why is this useful? Because you get all the benefits of owning the building — rental income, appreciation, tax advantages — without tying up your full net worth in a single deal. But, you’ve borrowed $1.3 million, which must be repaid.

The cash-on-cash return

Now here’s where leverage starts to flex its muscles: cash-on-cash return.

Cash-on-cash is a fancy way of asking, “What am I earning on the actual money I invested?”

If that $2 million building brings in $100,000 in income after expenses and debt payments, and you only put in $700,000 to acquire it, you’re earning roughly 14% annually on your cash. (That’s $100,000/$700,000.) Not bad.

But if you bought the building all-cash and still brought in $100,000 a year, your return would only be 5%. See the difference? ($100,000/$2 million.

That’s why experienced investors love leverage. It makes the return on your money better because you’re using someone else’s money to own more.

When the math goes backward

There’s a flip side to this, and it’s become more common lately: negative leverage.

Negative leverage happens when the cost of borrowing exceeds the return you’re getting on the property. Specifically, when your interest rate is higher than the property’s capitalization (cap) rate. Imagine paying 7% interest on a loan to buy a building that only returns 5.5% annually. That’s a losing equation from day one.

Unless you’re banking on major rent growth, redevelopment or some other value-creation, you’re effectively paying to hold the asset. Your cash-on-cash return goes down, not up. And in that scenario, leverage isn’t helping you, it’s hurting you.

We saw the opposite for years when money was cheap. Investors could borrow at 3% and buy properties at 5%-6% cap rates all day long. But today’s reality is different. Many deals that penciled before don’t anymore, not because the buildings changed, but because the cost of capital did.

Pitfalls of leverage

Leverage works great when things go well: when tenants pay rent, rates stay low and property values rise.

But if vacancy creeps in, or interest rates rise, or your building needs unexpected repairs, that monthly loan payment doesn’t go away. It still shows up every month, like clockwork.

I’ve seen more than a few deals that looked great on paper fall apart in practice because the borrower didn’t leave enough breathing room. That extra margin of return? It can vanish quickly when costs go up or income goes down.

And over-leverage can lead to overconfidence. I’ve watched folks stretch into larger deals just because the bank said “yes.” And when the market turned? That yes turned into a painful lesson.

Using leverage wisely

Leverage is neither good nor bad, it’s neutral. It’s how you use it that matters.

Here are a few guiding principles I share with clients:

—Be conservative. Just because a lender will loan you 80% of the purchase price doesn’t mean you should take it.

—Understand your debt. Know your payments, your interest rate, your amortization period and what happens if rates change.

—Stress-test your deal. If rents drop by 10%, can you still pay the mortgage?

—Watch for negative leverage. If you’re borrowing at 7% to buy at a 5% return, you need a very clear reason for doing so.

—Keep reserves. Surprises happen. Don’t let one roof repair or a missed rent payment jeopardize your investment.

Bottom line? Leverage can be your best friend or your worst enemy. Used with discipline, it can multiply your wealth. Used carelessly, it can multiply your mistakes.

Choose wisely.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

Recent numbers from property data firm Attom show home sales in the six-county Southern California region decreased from a year ago for the first time in nine months, falling to the second-lowest total for a May in at least 21 years.

Home prices, meanwhile, have mostly leveled off, with values dropping from April to May in three of the region’s six counties.

“It’s definitely been slower than in past years,” said Brandie Jones, a broker-associate with Downey-based Keller Williams Realty for Southeastern Los Angeles. “Buyers aren’t as eager to hop into the market because of all this uncertainty, uncertainty over tariffs.”

See also: Home-sale cancellations see ‘dramatic increase,’ agents say

Jones added that many would-be homebuyers are on the fence, waiting to see if interest rates or home prices drop.

For the most part, prices are not dropping in Southern California, although they did fall on an annual basis in Riverside and San Diego counties.

The median price of a Southern California home — or the price at the midpoint of all sales — was $825,000 in May, Attom reported.

On the one hand, that’s a record, topping the last high of $821,000 reached in February. Yet, May’s median was less than 1% above the year-ago level.

Price appreciation in April and May were the smallest for the region in two years, Attom figures show.

“With longer market times, negotiations have shifted in favor of buyers, and they are now calling more of the shots,” Steve Thomas, author of Reports On Housing, said in his latest dispatch.

Slow sales and steadily rising listings are behind the shift.

May saw 14,957 houses, condos and townhomes change hands, or 3.5% fewer than in May 2024, Attom reported Thursday, July 17.

That’s significantly below the May average of 21,000 home sales, and half the tally of May 2005, when buyers snatched up more than 33,000 Southern California homes.

This year’s spring — typically the busiest time of year for housing deals — is the third in a row of rock-bottom sales. Just two other springs, 2020 and 2024, were slower.

“We are seeing homes staying on the market longer, and we’re seeing more price reductions than we did in previous months,” Jones said, adding that buyers are worried about the economy and their job security.

“The ICE raids and things like that, they do have an impact on us. They do have an impact on our people,” Jones added. “People are kind of a little bit hesitant right now.”

Southern California homes are averaging more than 42 days on the market before going under contract, or almost 11 days longer than a year ago, according to the online brokerage Redfin.

See also: Seal Beach’s Water Tower House, a relic of 1890s ingenuity, lists for $5.5M

Slightly more sellers also are dropping their prices to make a deal than a year ago, Redfin reported.

Southern California’s active inventory of homes for sale hit the highest level in May and June since the pandemic lockdowns in the spring of 2020. The number of homes for sale increased 70% in the past 1 ½ years.

“The housing market has been tilting in buyers’ favor for months, with buyers getting concessions from sellers and often successfully negotiating sale prices down,” Redfin reported Thursday.

A slowdown in asking-price growth, along with a shrinking gap between asking prices and buyer offers, is a sign that sellers are coming to terms with today’s market, Redfin said.

“Sellers are having to be more realistic in terms of their purchase price,” Jones added. “And the buyer will more than likely ask for some closing costs or ask for a concession, and it would probably be in (a seller’s) best interest to consider that.”

A small improvement in interest rates from a year ago made Southern California homes slightly more affordable.

May’s rates for a 30-year fixed mortgage averaged 6.8%, compared with just over 7% a year earlier. The house payment for a median-priced home was $77 cheaper in May.

Still, the local housing market remains pricey. The median house price was $880,000 in May. Buyers need $1 million to buy the typical house in San Diego County and $1.3 million for an Orange County house.

The median price for a Southern California condo, the most affordable type of housing, was $685,000 in May, topping out at more than $700,000 in L.A. and San Diego counties. In Orange County, a typical condo cost $829,000.

Sales were down from year-ago levels in all six counties, Attom figures show.

Here’s a county-by-county breakdown of median prices and sales totals, with annual percentage changes:

—Los Angeles County’s median rose 2.8% to a record high of $915,000; sales were down 1% to 5,535 transactions.

—Orange County’s median was unchanged at $1.2 million, which ties a record set in May and June 2024 and again this past February and March; sales were down 8.3% to 2,154 transactions.

—Riverside County’s median fell 1.8% to $599,000; sales were down 4.5% to 2,570 transactions.

—San Bernardino County’s median rose 1% to $515,000; sales were down 3% to 1,698 transactions.

—San Diego County’s median fell 0.2% to $900,000; sales were down 4.4% to 2,384 transactions.

—Ventura County’s median rose 3% to $865,000; sales were down 3% to 616 transactions.

The senior living community Coventry Court in Tustin traded hands July 10, selling for $83 million. The seller was Meta Housing Corp. in Los Angeles, and the buyer was Jonathan Rose Cos. in New York. ()

The senior living community Coventry Court in Tustin traded hands July 10, selling for $83 million. The seller was Meta Housing Corp. in Los Angeles, and the buyer was Jonathan Rose Cos. in New York. ()

The senior living community Coventry Court in Tustin traded hands July 10, selling for $83 million. The seller was Meta Housing Corp. in Los Angeles, and the buyer was Jonathan Rose Cos. in New York. (Photo courtesy of Northmarq)

The senior living community Coventry Court in Tustin traded hands July 10, selling for $83 million, according to Northmarq.

The brokerage represented the seller, Meta Housing Corp. in Los Angeles. The buyer was Jonathan Rose Cos. in New York.

The deal closed July 10, Northmarq reps said.

The 55-and-older community in the Tustin Ranch neighborhood has 240 units, with more than half of them income-restricted. Only 87 units at Coventry Court are rented at market rates, according to Northmarq.

The apartments were completed in 2012 and sit not far from the blimp hangar that burned in 2023.

Bustling Fullerton Metrocenter sells for $118.5M

Space Investment Partners recently paid $118.5 million to Kite Realty for Fullerton Metrocenter, a 395,703-square-foot retail center anchored by Sprouts, Petsmart and Target.

The shopping center at 1375 Harbor Blvd. sits on 30 acres with 40 tenants that also include Urban Air Adventure Park.

“Looking ahead, we plan to revamp the center, bringing in new concepts and ensuring it serves the surrounding community as more housing is added,” said Ryan Gallagher, Space IP managing partner and co-founder.

Built in 1988 and updated in 2002, the shopping center will get some immediate improvements including fresh paint, updated signage, new landscaping, and leasing efforts “focused on attracting new food and fitness tenants,” according to the company.

Eastdil Secured represented the seller in the transaction.

Fullerton apartments fetch $4.1 million

A nine-unit apartment property in Fullerton sold June 13 for $4.1 million or $455,555 per unit, according to Marcus & Millichap.

Greg Bassirpou at Marcus & Millichap pointed out the small complex is minutes from Cal State Fullerton and retail centers, making it an attractive option for investors.

Bassirpou did not identify the buyer or sellers.

The property at 3169-3175 Quartz Lane includes one two-bedroom, two-bathroom townhome and eight two-bedroom, one-bathroom units in 9,831 square feet.

Amenities include a landscaped courtyard, patios, enclosed garages and on-site laundry rooms.

Bassirpou said the sellers made “extensive interior and exterior renovations to the property.”

CapRock goes big in Houston

Newport Beach-based CapRock Partners recently acquired a 524,199-square-foot, Class A industrial facility in Houston for undisclosed terms.

The fully leased Kennedy Greens Distribution Center was CapRock’s first buy in the Houston marketplace as it expands across Texas.

Built in 2020, the distribution center sits on 29 acres less than 3 miles from George Bush Intercontinental Airport.

“Houston’s industrial market continues to demonstrate strength, driven by durable demand, land constraints and a diversified economy,” Jon Pharris, co-founder and president of CapRock Partners, said in a statement.

Gantry moves mortgage team to Atrium in Irvine

Fresh off it’s deal to acquire Irvine-based Westcap, Gantry has relocated its now larger team to the Atrium office campus in Irvine.

The firm, which moved from Suite 285 at 19600 Fairchild Road in Irvine, now works from 19100-19200 Von Karman. The office complex includes an open air, 10-story lobby connecting two, 10-story office towers in 334,828 square feet.

Gantry’s new office space houses the firm’s commercial mortgage loan producers and corporate marketing staff.

Gantry Principal Andy Bratt said the firm’s operations “grew significantly” in 2024 after buying Westcap and its $3.2 billion loan servicing portfolio last December. The shift to a larger space will help integrate Westcap’s loan production staff with Gantry’s team.

Stream Realty Partners represented both sides of the five-year lease for 5,000 square feet.

The real estate roundup is compiled from news releases and written by Business Editor Samantha Gowen. Submit items and high-resolution photos via email to  sgowen@scng.com . Please allow at least a week for publication. All items are subject to editing for clarity and length.

This insight comes from my trusty spreadsheet’s analysis of rent inflation data from the Consumer Price Index, which tracks 23 U.S. markets, including three in Southern California. The CPI’s rent trends are based on tenant surveys tracking payments for various types of housing. Most industry metrics focus on asking prices for empty units in large apartment complexes.

Looking at the first half of 2025, the CPI shows rent inflation nationwide running at a 4% annual rate, down from a 5.6% increase in the first six months of 2024. That’s an improvement of 1.6 percentage points.

Yet, nowhere in Southern California did tenants experience the same or even a lower rent increase or see a more significant year-over-year improvement.

In San Diego County, renters experienced a 5.5% increase over the past year, the second-largest nationally. Yes, this was a decrease from a 6.2% rise in the first half of 2024. Yet San Diego’s rent-hike drop of 0.7 percentage points was only the eighth smallest among the 23 markets.

Inland Empire tenants saw a 4.9% increase, ranking it the seventh largest nationally. This represented a reduction from the 6% increase in the first half of 2024. But the decline of 1.1 percentage points was just the tenth smallest.

And in Los Angeles and Orange counties, renters experienced a 4.7% rent inflation. This rise, the eighth-highest among the 23 markets, matched the increase of the first half of 2024. L.A.-O.C.’s steady rent hikes made it the fifth-worst trend for tenants.

Southern California’s rent hikes remain elevated because the region has not seen the same construction boom as other parts of the country. Those newer apartments have helped cap rent increases.

Additionally, there were the wildfires in Los Angeles in January, which destroyed over 12,000 properties. This led to more local residents seeking rentals, while decreasing the available supply.

Nothing new

Sadly, painful rent increases are not a new issue, either locally or nationwide.

Since 2019, rent in the Inland Empire has risen 43%, the fourth-largest increase among the 23 U.S. markets. And San Diego’s 37% rent inflation ranked sixth.

L.A.-O.C.’s 26% six-year increase, ranking 17th, was the only local market below the national pace. U.S. rent inflation was 32% since 2019, according to CPI calculations.

Nationwide extremes

Rent inflation: St. Louis was No. 1 for the first half at 5.9%. Phoenix was best for renters, off 0.7%.

One-year change: Honolulu renters enjoyed the biggest improvement – a drop of 7.7 percentage points to 3.4%. New York had the biggest increase, up 0.8 points to 5.3%.

Six-year increase: Tampa is No. 1, up 54%. Smallest was San Francisco, up 15%.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

A: Unfortunately, it is all too common for HOAs to fail in membership meetings to attain quorum (the minimum number of participants to allow membership voting), and therefore fail to conduct an election.

However, that should be less of a problem following the relatively new Civil Code Section 5115(d)(2), which states that if a board election fails for lack of quorum, the HOA can adjourn the meeting to a new date at least 20 days later, at which time the quorum drops to 20%. Most HOAs should find that lower quorum number more attainable, and therefore help board elections to occur.

In the event an election fails for lack of quorum despite the reduced quorum, the directors continue to serve in their seats until they resign or are replaced by election, pursuant to Corporations Code Section 7220(b). So, your board would not need a resolution to continue to serve. They automatically continue to serve until they resign or until a successful election occurs.

M.D., you reference that ballots in your HOA are counted secretly, and that is not how the law requires counting to occur.

Civil Code Section 5120 requires that the vote counting occur in an open membership meeting or board meeting and that any member of the HOA can witness the vote counting. Also, under Civil Code Section 5125 any member can inspect the ballots and tally sheet.

Q: Are there any ramifications for HOAs who do not hold timely elections? —  A.W., Signal Hill

A: The answer to this question also comes not only from the Davis-Stirling Act, but from the Corporations Code.

Corporations Code Section 7510 states that if a corporation is overdue by at least 60 days in holding its annual meeting, or if it has not held an annual meeting in 15 months, a court petition can be filed seeking to compel the HOA to hold its annual meeting.

A simple reminder to the board and management hopefully should be enough, as court petitions require attorney fee expense.

Q: How do you remove a toxic committee member? — J.K., Santa Barbara

A: Normally, committee members are appointed by the board and serve at the board’s pleasure, unless the HOA bylaws state otherwise. If someone is creating havoc in a committee, the board can remove or replace them at an open board meeting. Some boards mistakenly call this a “personnel” matter and change committee rosters in closed session but that is a mistake – volunteers are not “personnel” and even though it might be awkward to do in an open meeting, such a decision must be out in the open (and noted in the minutes).

Richardson is a fellow of the College of Community Association Lawyers and partner of Richardson Ober LLP, a California law firm known for community association advice. Submit column questions to kelly@roattorneys.com. 

That FICO credit scoring monopoly is about to end after a July 8 announcement from Bill Pulte, director of the Federal Housing Finance Agency (the agencies’ conservator and regulator), allowing the mortgage giants to also use VantageScore.

“Effective today, to increase competition to the credit score ecosystem and consistent with President Trump’s landslide mandate to lower costs, Fannie and Freddie will ALLOW lenders to use VantageScore 4.0,” Pulte posted on X, formerly Twitter.

It’s a long time coming. The bipartisan Credit Score Competition Act was signed into law in 2018. Five FHFA directors later, Pulte moved forward with implementation.

When will these changes take place? Pulte didn’t provide a timeline, but a VantageScore representative said “soon” during a webinar I watched. Industry insiders expect it will take time to update all the guidelines.

VantageScore claims 2.7 million more mortgages will be generated in the market due to its model. The distinctions it claims are that it includes rent, utilities and telecom payments (which FICO does not include).

VantageScore also removes non-predictive data like medical collections, according to its webinar.

“VantageScores are more forgiving. Paid collections and unpaid collections are ignored,” said Mindy Leisure, director of credit education at Advantage Credit. “FICO, other than medical bills, weighs paid collections.”

Full disclosure: My firm does business with Advantage Credit.

Both scoring systems range from a low of 300 to a high of 850, according to John Ulzheimer, president of The Ulzheimer Group, a credit expert firm.

Below are the vague distinctions between FICO’s “weighing” and VantageScores’ levels of influence.

Weighted FICO scores are calculated using five information categories from your credit report:

—Payment history (35%)

—Amount owed (30%)

—Length of your credit history (15%)

—Mix of your credit accounts (10%)

—New credit accounts (10%)

VantageScore says it’s using five categories of information from credit reports. Instead of weighing, it describes a certain level of influence:

—Payment history (extremely influential)

—Total credit usage (highly influential)

—Credit mix and experience (highly influential)

—New accounts opened (moderately influential)

—Balance and available credit (less influential)

Fannie Mae and Freddie Mac are likely to adjust rates and points since these systems have different weightings. Industry jargon calls this Loan Level Pricing Adjustments or LLPAs.

We’ll note that just Tuesday, a judge in Texas removed a Biden rule through the Consumer Financial Protection Bureau that would have removed medical debt from credit reports. U.S. District Court Judge Sean Jordan cited the Fair Credit Reporting Act and said the CFPB is not allowed to remove medical debt from credit reports, per the Fair Credit Reporting Act.

Pricing new credit reports

For now, there are many questions about how the VantageScore system will work, including how much it will charge for its scores. A spokesperson declined to answer this week.

How much does FICO charge? The cost to industry mortgage originators in 2024 was $3.50 for each score. Each borrower receives three FICO scores — one from each of the three credit bureaus. FICO score prices soared to $4.95 each in 2025 (a 41% increase), according to Leisure. So that’s $15 for a consumer to get three credit reports.

Credit score fees are just part of the price to run credit. There is also the tri-merged credit report required by Fannie Mae and Freddie Mac. For example, a tri-merged credit report at my shop costs the consumer $94.

I’ll note that credit reports are not transferable so, borrowers can spend hundreds of dollars paying these credit report fees as they shop for a mortgage. It’s not uncommon for lenders to cover the credit report fee as a cost of doing business.

My hunch says some consumers will get hit with higher credit report/credit score charges from lenders, not lower costs, and with no consequential benefit.

In his FAQs on X, Pulte wrote in part: To promote robust competition and provide further flexibility for consumers and lenders, the Enterprises (F&F) will allow lenders to determine which credit score model to use on each loan they deliver.

In other words, they can pull both a VantageScore and a FICO score to see which one might increase the score for better consumer pricing. Remember that a failing score is 619 and a passing one 620. Yes, this could ultimately benefit some mortgage shoppers, even though the costs of the second credit report and scores are likely to be passed on to the consumer.

You cannot append a FICO score to a VantageScore credit report and visa-versa, according to Leisure. This means you must run another credit report. That means Transunion, Equifax and Experian get to double dip on credit report charges.

As an aside, FICO is a standalone company. VantageScore is owned by the three major credit bureaus Experian, Equifax and TransUnion.

One consumer advocate said the addition of VantageScore would only muddy the waters for borrowers.

In an interview with USA Today, Chi Chi Wu, director of consumer reporting and data advocacy at the National Consumer Law Center, said VantageScore is an extension of a credit score monopoly.

“The big three credit bureaus are basically a functional monopoly,” Wu said. “If you want a mortgage, you have to pull all three reports. You have no choice. They created VantageScore to try to drive FICO out of the market because they want the whole market. FICO is the only independent actor.”

What do the FICO folks think about this? In part: “The Federal Housing Finance Agency’s interim “lender choice” policy introduces a dangerous precedent that increases adverse selection risk that will raise prices for consumers. Further, it inexplicably favors a less predictive credit score that will undermine the safety and soundness of the enterprises and their counterparts, and damage liquidity in the $12 trillion mortgage industry.”

The FHFA, Fannie Mae and Freddie Mac did not respond to requests for comment.

Freddie Mac rate news

The 30-year fixed rate averaged 6.75%, 3 basis points higher than last week. The 15-year fixed rate averaged 5.92%, 6 basis points higher than last week.

The Mortgage Bankers Association reported a 10% mortgage application decrease compared with one week ago.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $806,500 loan, last year’s payment was $11 more than this week’s payment of $5,231.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.875%, a 15-year conventional at 5.5%, a 30-year conventional at 6.375%, a 15-year conventional high balance at 5.875% ($806,501 to $1,209,750 in LA and OC and $806,501 to $1,077,550 in San Diego), a 30-year high balance conventional at 6.625% and a jumbo 30-year-fixed at 6.5%.

Eye-catcher loan program of the week: A 40-year fixed rate mortgage, interest-only for the first 10 years at 6.625% with 1 point cost.

Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com

Investors own more than half of all the houses in seven California counties.

That’s one eye-catching nugget from my trusty spreadsheet’s review of data on investor activity across the nation from BatchData, a small data tracker that digs deeper into property records than many traditional real estate analysts.

BatchData reviewed California ownership records to identify the state’s owner-occupied residences compared to houses controlled by investors. This study included properties that owners use for short-term or long-term rentals, second homes, and vacation retreats. It does not follow condos, build-to-rent single-family-home projects, or multi-unit properties.

California’s seven investor-dominated counties are lightly populated places, located in remote, northern slices of the state. It’s a good bet that many of these investments are second homes for their owners. These seven counties, best known for recreation and tourism, are …

Sierra: 82% of single-family houses are owned by investors, or 1,308 of 1,588 all houses.

Trinity: 77% – 4,243 of 5,542 houses.

Mono: 74% – 3,200 of 4,305 houses.

Alpine: 68% – 575 of 842 houses.

Plumas: 64% – 7,422 of 11,651 houses.

Modoc: 56% – 1,047 of 1,878 houses.

Calaveras: 54% – 10,385 of 19,209 houses.

That’s a sharp contrast to the statewide total, where investors own 1.45 million houses or just 19% of 7.6 million statewide.

Big county counts

To gain a better understanding of where house investors make their largest bets in California, consider the state’s 20 most populous counties, divided in half by their investor share ranking.

Start with the 10 counties with the highest investor ownership among the big 20 counties. It was topped by San Bernardino, with investors owning 27% of all houses. Then came Tulare (25%), Sonoma (23%), Fresno (22%), Stanislaus, Kern, and Santa Barbara (21%), San Joaquin (20%), Riverside (19%), and Sacramento (17%).

In these counties, primarily locales that are a modest distance from the state’s major job hubs, investors own 21% of the houses – that’s 524,863 of 2.46 million.

Compare that to the other half of the big 20, essentially the state’s urban core. In this grouping, San Mateo County had the largest investor share at 17%, followed by 16% in San Francisco, Santa Clara, Solano, San Diego, Contra Costa, and Orange counties, 15% in Los Angeles and Alameda counties, and 14% in Ventura County.

Combined, investors own 15%, or 624,294, of these 4 million houses.

By the way, in the state’s other 38 counties – including the seven aforementioned investor-dominated ones – investors collectively own 28%, or 301,578 of 1.1 million houses.

Income matters

Note a significant demographic difference between these three groups.

Investors tend to shy away from the big-city counties where the combined annual household incomes run $105,700.

Instead, investors focus on California’s more rural counties, with annual household incomes of $84,700, and the less urban big counties, at $84,400.

Just like house seekers looking for a place to call their own, financial competition may be a deciding factor in where investors choose to go.

Who’s the landlord?

Most of California’s single-family house investors are “mom and pop” types, according to BatchData.

Small-fry owners, with up to five properties nationwide, control 91% of California investment houses.

The rest is divvied up this way: Owners of six to 10 houses control 4% of California investment houses. Investors with 11 to 50 houses own 3% of this Golden State housing group. And 51 or more? Only 2% of investment houses.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

The view from the deck. (Photo by Mike Dew at TourFactory)

The elevator. (Photo by Mike Dew at TourFactory)

The top-level rotunda. (Photo by Mike Dew at TourFactory)

The kitchen. (Photo by Mike Dew at TourFactory)

The Water Tower House recently hit the market for $5.5 million. (Photo by Mike Dew at TourFactory)

The Water Tower House rises above the Surfside community in Seal Beach. (Photo by Mike Dew at TourFactory)

The dining area. (Photo by Mike Dew at TourFactory)

Anyone who’s ever driven through Seal Beach on the Pacific Coast Highway has likely seen the landmark water tower, a relic of 1890s ingenuity.

The tower recently hit the market again for the third time since its transformation into a house in the 1980s, and this time, it comes with an asking price of $5.5 million.

Within its 2,828 square feet are four bedrooms, four bathrooms and a rotunda-style living area with 360-degree views. Those panoramic coastal to mountain vistas are visible from most rooms in this one-of-a-kind home, which rises above the gated Surfside community.

The living begins at the base of the tower at the foyer, which features a cascading water feature and a wall of tools unearthed in the 1940s that were once used by linesman to repair the tower. These are not the only artifacts or nod to its past used in its design.

In the ground-level guest room, a panel in the wall opens to a staircase that leads to a tiny bedroom nook.

Take the elevator 70-feet up to the elevated living areas, which open to a walk-around deck for unobstructed views, from the ocean to the mountains.

Inside, there’s a well-appointed kitchen with modern amenities and dining area.

Model trains suspended from the ceiling “remind us of why the water tower is here,” Scott Ostlund, a previous co-owner told Architectural Digest in 2019.

A spiral staircase connects the upper levels, including two ensuite bedrooms on the fourth level. One features a rotating water closet and a step-down rainfall shower.

The top-level rotunda is an open-concept space with redwood beams and large picture windows.

A stained-glass cupola crowns the structure, while a compass rose adorns the hardwood floor below.

“Add a laundry room and garage parking to the ever-growing list of perks,” the listing reads.

The tower, built by Southern Pacific Railroad around 1892, originally supplied water to steam engines that traveled along the coast. After a successful “save our water tank” campaign in the early 1980s, the community preserved the structure. It included a 75,000-gallon tank that held water until the 1970s.

In 1984, investors transformed the tower into a home.

Retired South Pasadena Fire Chief Gerald Wallace bought it in 1995 for $800,000. After listing it multiple times for up to $8 million, he sold the property to Ostlund and his investment partner in 2016 for $1.5 million.

After they restored and decorated the tower, they listed it June 2021 for $4.95 million.

The current owner is Orange County historic preservationist and physician Dr. Gregg DeNicola and his wife, Mary. Records show they purchased the water tower house in July 2022 for $4.5 million.

John Simcoe of Keller Williams Realty is the listing agent.

After years of soaring rents, increasingly out-of-reach home prices and an enduring homelessness crisis that touches every corner of the state, California is finally creating a state agency exclusively focused on housing issues.

You might wonder what took so long.

Earlier this year, Gov. Gavin Newsom introduced a proposal to split up the Business, Consumer Services and Housing Agency — an awkward grabbag of disparate bureaucratic operations — into two fresh agencies: One just for housing and homelessness-related departments and one for everything else.

The Legislature had until July 4 to veto the plan. It didn’t though some Republicans tried. Now the work of standing up California’s first housing agency begins.

Supporters of the bureaucratic reshuffle say the move is long overdue. In surveys, Californians regularly name housing costs and homelessness as among the state’s top concerns. That alone warrants the creation of a new cabinet-level adviser to the governor, said Ray Pearl, executive director of the California Housing Consortium, which advocates for affordable housing development.

“A cabinet-level secretary who will sit with other cabinet secretaries, whose purview will be housing … that is elevating the agenda to the highest level,” he said.

Pearl, like virtually every expert interviewed for this article about the new agency, described the reorganization as “just the first step” in bringing much-needed order and efficiency to California’s network of funding programs for affordable housing.

“Simply moving people around and giving them a new business card doesn’t change the system,” he said.

A spokesperson for the governor stressed that the creation of a new housing agency is part of a broader effort by Newsom to prioritize one of California’s most vexing issues. Since taking the helm of state government in 2018, the governor has ramped up pressure on local governments to plan for more housing, urged them to clear encampments of unhoused Californians and pushed for legislation aimed at ramping up construction.

“This is the first administration to make this a part of our everyday conversation — putting a magnifying glass on the issue of homelessness and finding ways to effectively address it. These structural and policy changes are going to create a generational impact,” said spokesperson Tara Gallegos.

Among the seven cabinet-level agencies, the BCSH has always seemed like the “everything else” wing of state government. Affordable housing grantmakers, lenders and urban planning regulators share agency letterhead with cannabis and alcohol industry overseers, professional licensors, car mechanic watchdogs and everyone at the California Horse Racing Board.

“We used to call it ‘The Island of Misfit Toys,’” said Claudia Cappio, who ran both the California Housing Finance Agency and the Department of Housing and Community Development in the years immediately before and after 2012 when both were packed into the newly created BCSH. “Imagine a staff meeting of all those things … I learned a lot about horse racing.”

How many financing systems is too many?

Aside from giving housing and homelessness its own box atop Newsom’s organizational chart, the chief selling point of the reorganization has been to simplify the state’s hydra of affordable housing financing systems.

Currently, there is one state organization where affordable housing developers apply for loans, another where they go for most grants, a third where they apply for the federal tax credits that builders use to entice private investors to back their projects and a fourth for the bonds needed to secure many of those credits. This doesn’t include one-off programs for veterans, transit-oriented development and short-term housing for homeless people, which are sprinkled across state government.

Complicating things further, the tax credit and bond funding programs — the backbone of funding for affordable housing development across the country — aren’t even under the governor’s control. Those programs are run by the state’s independently elected treasurer.

“Many, many states have what is essentially a housing finance agency that controls the majority of affordable housing funds,” said Sarah Karlinsky, who directs research at UC Berkeley’s Terner Center for Housing Innovation. California’s programs are split up, which is unusual.

Beyond that, “what makes California so unique,” said Karlinksy, “is the fact that the resources are spread across two different constitutional officers.”

That fragmentation appears to be adding to the cost of construction in California. A Terner Center analysis this spring estimated that each additional public funding source delays a project by, on average, four months, and adds an additional $20,460 in costs per unit.

Affordable housing construction is already distinctly expensive here. Building a publicly funded project in California costs more than 2.5 times more per square foot than in both Texas and Colorado, a recent report from the Rand Institute found.

The dance of secretaries

Will the new housing agency solve that problem? Not everyone is convinced.

Of the many ways in which the scarcity of affordable housing affects most people, “the lines on the org chart” don’t crack the “top 100 list,”  Sen. Christopher Cabaldon, a Napa Democrat, said about the governor’s proposal at a hearing in March.

Cabaldon noted that executive reorganizations are a semi-regular feature of California governance. The Business, Consumer Services and Housing Agency is itself the product of a reorganization which spun off California’s independent transportation agency.

“The dance of the secretaries we do constantly, always with grand ambitions,” said Cabaldon. “Simply saying that it’s going to cause more focus, that it will be streamlined, that it will cause leadership level action — but how?”

As written, the new housing agency will consist of the current agency’s housing-related entities along with a new Affordable Housing Finance Committee, which will be tasked with coordinating the housing subsidy programs currently under the governor’s control.

But the major funding sources managed by the treasurer’s office will remain where they are. The California constitution wouldn’t have allowed Newsom to commandeer those functions from the independent treasurer even had he wanted to.

That’s a significant shortcoming, according to the Little Hoover Commission, the state government’s independent oversight agency, which reviewed the governor’s plan before it was passed along to the Legislature. In its final report, the commission recommended that the governor and treasurer strike a formal deal to “create a unified application and review process” for all the affordable finance programs under their respective purviews.

Neither the governor’s office nor the office of state Treasurer Fiona Ma would say if or how they are pursuing that goal.

A single, unified application for every one of California’s public affordable housing funding programs has been the bureaucratic holy grail of California affordable developers and policy wonks since at least the mid-1990s. Though the reorganization stops short of requiring that, it set up both constitutional offices to better coordinate in the future, said Matt Schwartz, president of the California Housing Partnership, a nonprofit that advocates for affordable housing.

“There’s going to be a bit of diplomacy” between the two executive branches to work out a joint application, said Schwartz, who spoke to CalMatters earlier this year after the governor first introduced the proposal. “That’s the longer-term prize that many of us will be pushing to come out of this process.”

Some affordable housing advocates have urged lawmakers to be cautious in mushing the various bureaucracies together.

In a letter to four powerful Democratic legislators, the California Housing Consortium stressed that the application systems administered by the treasurer’s office already “function extremely well.”

That process “is not broken and doesn’t need fixing,” said Pearl, the consortium’s director. Before monkeying with it, he said, “let’s get the agency set up.”

Pearl and the consortium also noted that past legislation has already mandated the creation of a working group to propose a consolidated application. The findings of that group are due on July 1, 2026. That’s the same day the current BCSH is set to officially dissolve and the two new agencies will take its place.

That’s also just five months before statewide elections will be held to replace Newsom and Ma, giving voters a chance to decide who will shape the future of affordable housing policy in California.

California’s drive to run its electric grid entirely on wind, solar and other clean sources of energy just got harder after President Donald Trump signed a sweeping new budget law.

The changes in federal tax incentives could affect the feasibility of new solar and wind projects as the state is counting on them to provide more electricity for Californians. A state law requires 100% of electricity to be powered by renewable, carbon-free sources by 2045, at the same time it’s moving to electrify cars and trucks.

Incentives championed by former President Joe Biden were rolled back, shortening the timeline for the industry to obtain tax credits. Developers of wind and solar projects now face a new, shorter deadline for obtaining tax credits — most now expire at the end of 2027 instead of no sooner than 2032.

In addition, the new federal rules bar companies from accessing tax credits if they rely on major components from China or other “foreign entities of concern.” This restriction could hit California’s solar and wind industry especially hard, experts said.

The changes to tax credits are estimated to save the federal government approximately $499 billion from 2025-2034.

“For too long, the Federal Government has forced American taxpayers to subsidize expensive and unreliable energy sources like wind and solar,” Trump wrote in an executive order last week. “The proliferation of these projects displaces affordable, reliable, dispatchable domestic energy sources, compromises our electric grid, and denigrates the beauty of our Nation’s natural landscape.”

Projects can still be built without tax credits. But it puts more of a financial burden on their investors. In California, 11 solar projects and one onshore wind project now face potential delays or cancellation, according to an analysis of federal data by Atlas Public Policy provided to CalMatters. The projects are spread across the Central Valley, Inland Empire and Northern California.

Sean Gallagher, senior vice president of policy for the Solar Energy Industries Association, said in a statement that the industry was still “assessing what the federal tax bill means for them.” He warned the changes could jeopardize up to 35,700 solar jobs and 25 solar manufacturing facilities in California — including existing positions and factories as well as future projects that may now never materialize.

“The reality is, with or without clean energy tax credits, California’s energy demand is growing at a historic rate, and solar and storage are the fastest and most affordable way to meet that demand,” Gallagher said.

California in recent years has been fast-tracking massive floating offshore wind farms 20 miles off the coasts of Humboldt County and Morro Bay. The federal changes add some uncertainty that could chill investment. But experts say it’s not a death knell for the industry because the projects weren’t set to seek federal permits or generate electricity for at least several years.

“Offshore wind is what we would call a long-lead project. It does take years and years to develop,” said Assemblymember Dawn Addis, former chair of the Assembly’s Offshore Wind Select Committee. “Solar is a little bit shorter of a time frame…but it’s also his incredibly erratic behavior when it comes to market stability overall that is also going to affect these projects in a negative way.”

Experts say in the long-run, the federal changes could drive up energy costs.

“Tax credit savings are typically passed onto ratepayers through lower contracting costs. In the long term, the repeal of the tax credits will result in higher future electricity rates for customers,” the California Energy Commission told CalMatters.

Rising utility bills are already a major political headache for state leaders and a challenge for clean energy advocates who want the state to lead the way in making electricity cleaner, cheaper, and more reliable.

“The whole point of California’s climate policy is not just to reduce California’s carbon footprint — because we are less than 1% of global emissions — but to set an example and show that this can be done,” Berkeley economist Severin Borenstein told CalMatters. “There are going to be fewer other states following our example because it’s going to be more expensive.”

The new hurdles for solar and wind come as they are scaling up to meet surging electricity demand nationwide, including from energy-hungry data centers fueling the rise of artificial intelligence.

California Energy Commissioner Nancy Skinner, in an interview with CalMatters, said the federal law is a national “job killer” and was short-sighted. “The economics of renewable energy generation speak for themselves….The cost of solar generation now is competitive with natural gas,” she said.

“We’re not going to back away from our commitments and our goals,” she added. “Our commitment — whether it is to zero-emission vehicles, or to renewable energy generation — is about cleaning the air as well as addressing the climate crisis…Nobody wants to live in smoggy communities, where the air you’re breathing hurts you.”

Solar and wind projects have helped California log key renewable energy milestones in recent years. Last week, Gov. Gavin Newsom said nine out of every 10 days so far in 2025 have been powered by non-fossil fuels for at least a part of the day.

The state’s grid runs on a mix of renewables — solar, wind, geothermal, nuclear, biomass and hydropower — an average of seven hours a day, the governor said, citing new data compiled by the California Energy Commission.

“The fourth largest economy in the world is running on more clean energy than ever before,” Newsom said in a statement. “Trump and Republicans can try all they want to take us back to the days of dirty coal but the future is cheap, abundant clean energy.”

But industry officials say the state isn’t doing enough. They say the state has too many hurdles for building wind and solar projects and needs to offer more funding.

“For years now, too many California leaders have retreated from true clean energy leadership — hopefully the tax bill serves as a wakeup call that their leadership on clean energy is more important now than ever,” Gallagher said.

Trump and Congress did not shorten the tax credit deadlines for nuclear power plants, hydroelectric facilities, battery storage and geothermal plants. Congress also dropped a provision that would have added a new excise tax on wind and solar.

For wind and solar, there’s still a possible path to claim tax credits if construction starts within a year or they come online by the end of 2027. Senators added that provision to soften the blow. In theory, those projects could be finished and connected to the grid as late as 2031 and still qualify, but that depends on how the Treasury Department defines what it means to “start construction,” said Kevin Book, an energy analyst based in Washington, D.C.

“In the short-term, it might actually increase or shift earlier expenditure on these kinds of clean energy projects and all else equal,” said David Victor, a professor of public policy at UC San Diego. “California is in a pretty good position to profit from that acceleration.”

But Victor warned that the long-term costs could become “a political nightmare.”

“The long-term incentive, clearly, is to try to slow down investment in solar and wind and electric vehicles,” Victor said.

Borenstein took a more measured view about the impact on costs: California’s high electricity prices aren’t mainly about power production — they’re driven by wildfire costs, including past damage payouts and upgrades to prevent future fires. Other drivers include subsidies for low-income customers and the cost shift from rooftop solar, he said.

Some legislators have advocated for the state budget to cover more of these costs, but Borenstein said it’s politically easier to keep charging customers through their electric bills.

Alex Jackson, who leads the industry group American Clean Power California, said the state should use money from its cap-and-trade program to lower bills. Cap and trade is a market system that charges California companies for the greenhouse gas emissions they produce. Jackson said those funds could help pay for grid upgrades so ratepayers don’t have to.

He said the state also could lower clean energy costs by speeding up permitting, easing environmental rules for upgrades to existing projects and reducing costs for turning farmland into solar farms. He also called for expanding regional electricity markets to help California trade power more efficiently — a controversial idea being debated in the Legislature this year.

The state Legislature has debated for years exempting some clean energy projects from the state’s landmark environmental law, the California Environmental Quality Act, which is often blamed for delays. State Sen. Scott Wiener, of San Francisco, has advocated for such changes.

“California has always been a leader, and we need to step that up significantly,” Wiener told CalMatters. “We’ve really aggressively invested in clean energy, and we need to ramp up that investment, and we need to make it easier and faster to get clean energy deployed.”

In addition to the wind and solar credits, the budget signed by Trump also ends tax credits for purchase of electric cars, rooftop solar panels, home batteries, heat pumps, insulation, energy-efficient windows and doors, and other upgrades. Rooftop solar tax credits end this year. Federal tax credits for hydrogen production end after 2027 — a blow for California, which had positioned itself as a national hydrogen hub. Those changes are estimated to save about $543 billion from 2025–2034.

The state Energy Commission said the elimination of the EV credits beginning on Sept. 30 will mean “lower adoption of electric vehicles” and a “potential short-term spike in ZEV sales” before that date. Rooftop solar projects and heat pump sales also are likely to decrease, the agency said.