Straw in the Wind?

In the wartime real-estate boom, prices soared faster and higher on the West Coast than anywhere else (TIME, April 29). But last week there were signs that the boom, which might be a barometer for the rest of the U.S., was leveling off.

"For Sale" signs were appearing on small homes in Los Angeles, and in May there were 5% fewer sales than in April. Prices up 116% over 1940 levels had not yet started down. But banks were becoming cautious. Most of them now held their loans to about 35-50% of the purchase price. Thus buyers had to put up more cash. Example: last November on a $7,250 house banks would lend $3,600. Now the same house sells for $12,000, but most banks will lend only $4,000.

One big exception was A. P. Giannini's giant Bank of America. It has continued to lend the legal maximum of 60% of market value. Result: last April, Bank of America lent $26,996,000 in Los Angeles County while the Security-First National Bank of Los Angeles lent only $2,399,000 (in 1941, Bank of America lent less than twice as much as Security-First National).

Said Bank of America's Board Chairman Al Gock: "We turn down few loans."

Bankers wondered if that was wise. One wondered aloud: "I guess Giannini knows what he is doing . . . but you can't get a damn cent out of real-estate loans when the bottom drops out.''

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