Panelists said the housing market is much more measured and cautious than before the recession.

ORANGE, CA-Despite the recent slowdown in housing prices and sales volume, as well as the looming specter of higher mortgages, panelists at Arixa Capital Advisors‘ recent first investment roundtable in Orange County were surprisingly sanguine about the future prospects for the single-family market.  In answering the topic question, “Are happy days here again?” Emile Haddad, president and CEO of FivePoint Communities, characterized the state of the market as “sober” happy days, as opposed to the “drunk” happy days of 2005.

Gerd-Ulf Krueger, principal economist of Krueger Economics, noted that the sizable rebound in housing prices following the real estate crash of 2009 is evidence that happy days are indeed here again. He called the rebound a “big bang,” but tempered his enthusiasm, saying that following any big bang there is an inevitable slowdown. We are entering a slower phase, he said, which is characterized by lower affordability.

John McMonigle, principal and founder of the McMonigle Team, added that the Pacific Rim buyer, often from China, has been a positive factor in supporting home prices. He added that these buyers are interested in a particular product with new construction in master-planned communities, rather than eclectic older homes.

Haddad supported McMonigle’s statement by saying said that 70% of the 280 homes he has sold in the Great Park Neighborhoods master-planned community since October 2013 have been to Pacific Rim buyers. He added that concerned regime members and business owners in China will continue to move their money out of the country in anticipation of a slowing Chinese economy, which may lead to political instability in the future.

Scott Laurie, president and CEO of Olson Co., commented that the types of homes that sell well in one area of coastal California may not necessarily sell well in another area. For this reason, it’s important to understand exactly to whom you are selling, how the will pay for the home and the features and characteristics for which they will pay.

Entitling land is one of Laurie’s firm’s greatest ways of adding value, he commented. Looking for land that has been zoned for commercial use and attempting to entitle it for residential development can be a difficult and drawn-out process; however, in recent years the time to entitle land in L.A. has fallen from 24 months to 10 months.

Jan Brzeski, managing director and CIO of Arixa, said that it is precisely these difficulties with entitling land that makes renovating existing houses so attractive. As reported last week, lending to developers who buy homes execute major renovations before selling them is a new niche for Arixa. This type of development is also the business of Greg Hebner, managing director of Community Rebuild Partners, which has been forced to seek investment opportunities in higher-priced homes that are not attractive to the institutional investors as rentals. Hebner added that in recent months he has seen a slowdown in sales, which he believes is partially a function of higher interest rates.