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CBS Money Watch
September 18, 2015
Shanshan Wu already owns three houses back home in China. But the 36-year-old has spent the last two months in Chicago shopping for a three-bedroom. She's got cash to spend -- up to $400,000.
And she's not done.
"The real estate market in China is dropping and I'm planning to sell one of them to maybe buy more houses in the U.S.," said Wu, whose hometown of Yunfu is in the province of Guangdong in southeast China.
Chinese have been snapping up U.S. real estate of all kinds, looking for a safer place to put their money than their own slowing economy. Investors from China are now second only to Canadians in the number of U.S. homes they buy.
In the last few months, amid signs that China's economy is slowing even more than expected, Chinese investors have stepped up their buying even more. The government's decision last month to downgrade the country's currency added to their urgency, since a weaker yuan makes buying real estate in dollars more expensive.
"I got a spur of buyers contacting me the past few days," said Gloria Ma, an agent with Re/Max Action in Lisle, Illinois, who is working with several Chinese homebuyers. "Some of the people are selling part of their holdings over there and come here and buy."
While purchases by foreigners represent just a sliver of overall U.S. home sales, they have impacted markets significantly in certain cities such as New York, San Francisco, Seattle and Irvine, California. Buyers are also showing up in more affordable Midwestern areas like Chicago.
In the 12 months ended in March, roughly 209,000 U.S. houses were sold to buyers living outside the U.S. or immigrants in the country for less than two years, according to the National Association of Realtors. That represents about 4 percent of all sales of previously occupied homes in the same period.
Of the $104 billion in total sales, Chinese buyers accounted for the biggest portion, $28.6 billion. Half of those sales involved homes in Florida, California, Texas and Arizona.
Overall, U.S. home sales to foreign buyers have been falling -- 10 percent in the 12 months ended in March compared to the same period a year earlier -- but the devaluation of the yuan makes a slowdown in Chinese deals unlikely.
That's one reason it's likely that Chinese who are interested in buying real estate won't pull back now, said Lawrence Yun, chief economist for the National Association of Realtors.
So far this year, the yuan has fallen 2.6 percent versus the dollar. It now takes about 6.37 yuan to buy $1. That's still better than five years ago, when 6.77 yuan bought $1.
For now, the change in the currency is likely not enough to dissuade well-heeled homebuyers from China, said Wei Min Tan, a real estate broker who caters to investors looking to buy condominiums in Manhattan.
"My clients may say, 'OK, I'll just negotiate an extra 5 percent off," said Tan, whose clients tend to buy condos priced between $1 million and $5 million.
That price range is typical of Chinese investors buying homes elsewhere in the U.S. And most of them pay in cash.
"In the last year or two, we've seen more sales pushing $5 to $10 million," said Tere Foster, managing broker for Team Foster at Windemere Real Estate in Seattle.
The segment of homes most in demand by Chinese buyers are those priced around $1.2 million, she said.
"That's where we're seeing a lot of the business," Foster said.
Not all buyers are wealthy investors. Some are middle-income earners with kids bound for university in the U.S. They will typically buy an apartment or small single-family home for their kids to live in while they go to college, said Lisa Li, an agent at Re/Max of Naperville, a suburb of Chicago.
Others will use the home as a vacation property or a rental.
It's not just the U.S. attracting Chinese real estate investment. Australia, other parts of Asia and Europe have also been popular spots for Chinese homebuyers.
And since 2010, investors from China have bought roughly 100 vineyards in France's Bordeaux wine-making region, according to a report published earlier this year from Christie's International Real Estate.
The main reason: To protect their money.
"They want a safe place to park their assets," Tan said. "A lot of my clients were not expecting the Chinese economy to be strong indefinitely. A lot of them started moving assets to safer countries a few years ago."
Wu, CEO of a countertop maker, is looking to make her move now.
She plans to buy a house in cash and live there for at least three years as she works to gain a foothold for her business in the U.S. Wu's also eyeing Chicago's Chinatown neighborhood as a location where she might buy another home as an investment, and to host out-of-town visitors.
Wu says she's determined to land her first home in the U.S., despite extra costs from the devaluation of the Chinese currency.
"It affects us a little bit," Wu said. "But not much."
The Los Angeles Times
09/26/2015
One of China's largest developers plans to build a $125-million apartment and shopping complex in Hollywood — marking the expansion of mainland Chinese builders in the Los Angeles area beyond downtown and Beverly Hills.
Gemdale Corp., which has constructed some of the largest residential communities in China over the last two decades, has formed a partnership with LaTerra Development of Los Angeles to erect a six-story residential and retail complex on Western Avenue near Sunset Boulevard.
It is the first Southern California project for Gemdale, and Hollywood's perceived glamour played into the decision to build there.
"Everybody loves Hollywood because of movies," said Jason Zhu, chief executive of Gemdale USA. "This seems like a very promising area."
LaTerra is a private company that specializes in building urban housing and has projects in the Los Angeles neighborhoods of Silver Lake and Glassell Park, among others.
By contrast, Gemdale, based on the mainland in Shenzhen, is listed on the Hong Kong stock exchange and has built more than 30,000 condominiums in 25 Chinese cities in 2013 alone, the company said.
Its move into Hollywood comes after other large Chinese developers, including Greenland Group, Oceanwide Real Estate Group and Shenzhen Hazens Real Estate Group Co., have started work on billions of dollars worth of new condominium, hotel and retail projects near Staples Center.
Wanda Group, another Chinese firm, is set to build a $1-billion condominium and hotel complex in Beverly Hills on the former site of a Robinsons-May department store on Wilshire Boulevard.
Gemdale sees opportunity in Hollywood beyond the glitz: Demand for rental housing is growing there as the community has transformed in recent years into a hub of businesses that meld entertainment, technology and digital media — and hire lots of younger workers.
For example, video-streaming service Netflix, which has started making its own television shows, will move its Southern California headquarters from Beverly Hills to Hollywood late next year in an expansion that will nearly triple its office space in the region.
"Now the job base is more diverse. Netflix is not Paramount Studios," said Paul Darrow, an apartment sales broker at Marcus & Millichap who is not involved in the development. "People who were living with their parents and taking those unpaid internships are now getting jobs."
That jobs growth has made the Hollywood apartment market the most improved for landlords in Los Angeles County over the last year, according to the brokerage. Vacancy fell to 3.4% in the second quarter, and average monthly rents rose 5.3% to $2,187 from a year earlier.
Gemdale and LaTerra plan to appeal to young workers by keeping units small enough to be affordable to renters who can pay about $2,000 a month. They intend to build more than 200 apartments over street-level shops at 1350 N. Western Ave.
The 4-acre site has an empty three-story office building that was formerly home to entertainment post-production firm Deluxe Laboratories. The new apartment building and a parking structure will rise on a parking lot next to the office, which will be upgraded and rented to new tenants as part of the project, said Charles Tourtellotte, chief executive of LaTerra.
Construction should start on the garage by the end of this year, he said, and the entire project should be finished by early 2018. An outstanding question is the exact number of units. The plan is to build as many as 254, more than typically would be allowed on the property, by setting aside 21 apartments for "very low-income" residents, Tourtellotte said. Developers can be rewarded when they include affordable housing in a project.
Gemdale's announcement of its project is the first since the recent slowdown in the Chinese economy and dramatic losses on the country's stock exchange prompted worries that the tidal wave of Chinese investment in Los Angeles might come to a halt.
Simone Liu of Wells Fargo Advisors in Beverly Hills, who gives investment advice to Chinese clients, said the opposite dynamic appears to be in play.
"After what happened in China, people are looking for ways to diversify their portfolios," she said "They feel like the U.S. is more transparent and there are more opportunities in the real estate market here."
Gemdale's Zhu said Los Angeles has special appeal to Chinese visitors and investors.
"The first place many people come to in the United States is Los Angeles," he said. "It's very famous in China."
By Frank Shyong
As classic diners and soda fountains gave way to double-decker strip malls packed with Chinese restaurants, Margie Myers, a resident of Alhambra for 64 years, didn't say much.
She weathered friends and neighbors moving away and endured the steady retreat of English from storefront signs.
But the change she couldn't accept came in June, when the Ralphs on Alhambra's Main Street closed and was replaced by 99 Ranch, an Asian supermarket.
"I know the city's changing," Myers said. "That's just inevitable. But does it have to change our supermarket?"
Few hallmarks of demographic change generate as much controversy as the death of the neighborhood grocery store.
This spring, Alhambra residents packed City Council meetings at the news that the Ralphs on Main Street was closing, though the city had no role in the renting of the space. Rumors flew of Chinese ownership driving up rental prices to kick Ralphs out, though the property owners are not Chinese and Ralphs decided not to renew an expiring lease.
The debate over Ralphs contained all the fears and frictions found in any rapidly changing community. Longtime residents couldn't accept that demographic change had reached their grocery baskets. Immigrants and newcomers complained of xenophobia and racism in the opposition's protests.
Alhambra's conflict echoes in communities across the Southland. Latino grocery stores move into South Los Angeles and a mini-Wal-Mart battles for market share in Chinatown, said Min Zhou, a professor of sociology at UCLA.
"It's almost like all of the fear and anxiety over demographic change focuses on a grocery store," Zhou said.
Since Ralphs Store No. 199 closed in March, Myers has been driving three miles farther to Pavilions in South Pasadena for her groceries. It's a short journey that begins in one era of the city and takes her through another.
She backs her Chevy Tahoe out onto a quiet tree-lined street of ranch-style homes. Her father, an Army veteran and former professional baseball player, bought their house new in 1947 for $10,700, and the city identified it as a historic neighborhood in 2005. She's lived here all her life.
She heads north toward Valley Boulevard, home to one of the largest and most vibrant Chinese commercial centers in the Southland. But Myers prefers to remember it as Crawford's Corner, a family-owned shopping center with a grocery store, gift shop and a gazebo where you could hear Dixieland music play.
Farther north, past Main Street where she used to turn left to go to Ralphs, Myers points disapprovingly at a senior housing complex built by a Chinese developer that towers over the surrounding homes.
"We're being pushed out," she said.
Myers pulls into the parking lot at Pavilions and consults a shopping list that includes potato chips, pickles, tomato paste, Bud Light, black olives, French bread and Vienna sausages. She's serving barbecue ribs, Caesar salad, potato salad and corn on the cob for dinner tonight.
She could buy those things at stores in Alhambra. But it's not about groceries, Myers said. It's about comfort — the familiar smell of the Pavilions, the American music on its soundtrack, the way the fish comes wrapped in plastic or displayed behind glass, and the language that the specials are announced in — English.
Having the right kind of supermarket in Alhambra isn't about convenience, Myers said. Her complaints about grocery shopping can snowball into grievances about bad driving, rude service at restaurants, cleanliness and eventually, what kind of community Alhambra should be and what it means to be American. Conversations about grocery stores, Myers said, always become conversations about belonging.
"All the businesses and the markets are becoming Asian," Myers said. "And I just don't fit in here anymore."
City leaders say they tried to negotiate to keep the Ralphs in place, but they can't tell landlords what tenants to contract with. They have even less control over the demographics of the city, which have changed dramatically during Myers' lifetime.
Alhambra's Asian population has increased from less than 3% in 1970 to 52% in 2013, according to recent census surveys. The white population of the city, which has dominated for most of the city's history, has fallen to about 11%. The Latino population has also declined slightly, to 35%.
The city's supermarkets rise and fall along with the city's demographics. Trader Joe's, Vons and another Ralphs have been among the traditional Western supermarkets that have closed over the last two decades. Super A, a multicultural grocery store serving many Latino customers, closed in 2013.
When change reaches the grocery store, people take notice, Councilman Stephen Sham said.
"I don't like change either, but it's coming," Sham said. "I hope that everyone keeps an open mind and that they're realistic."
99 Ranch markets first gained fame for packaging Asian groceries for Western shoppers. The company has two unofficial slogans, spokeswoman Teresa Leung said: "window to the East" for those with American tastes, and "home away from home" for immigrants.
The new Alhambra store is an experiment to see if both missions can be merged, Leung said.
On a recent weekday, a Beach Boys song played over the supermarket's speakers. A banner tacked over a refrigerator case of Chinese sausages encouraged shoppers to "Bring home a taste from the Far East today." Produce shelves built to look like rustic wooden vegetable carts held peaches and pears next to electric pink jackfruit. Humming freezer cases offered dozens of varieties of frozen dumplings, but also Hot Pockets, Totino's Pizza Rolls and Nestle Drumsticks.
The company, which has 37 locations across the U.S., knows it's seen as an immigrant supermarket, but the Alhambra store is an attempt to expand beyond that, Leung said. 99 Ranch wants to attract a younger generation of shoppers who appreciate authentic Asian goods but also consume familiar American products.
"99 Ranch can't stay doing the same things the same way we did 30 years ago," Leung said.
When the company opened its first location in Westminster in 1984, ethnic supermarkets like 99 Ranch functioned as economic toeholds for early immigrant communities, said Linda Trinh Vo, an Asian American studies professor at UC Irvine.
In the San Gabriel Valley, they anchored strip malls and attracted restaurants, barbers, butchers and clothing stores, creating jobs for immigrants including Jun Chen, 65.
Chen and his wife settled in Monterey Park about 30 years ago, a short walk from a Shun Fat Supermarket and a 99 Ranch grocery store. He worked as a cook in nearby Chinese restaurants, which relied on the supermarkets for produce. His wife, a seamstress, benefited from the steady flow of Asian immigrant foot traffic to the area.
Together they earned enough to send four children to college. They retired three years ago to a home in San Gabriel.
"America has been good for us," Chen said. "We've always had work. We've done well here."
On a recent weekday, they headed to the 99 Ranch where they've done most of their shopping and loaded a cart with discounted okra.
Here, price takes priority over presentation. A blast of mingled vegetable, seafood and pastry odors greets shoppers at the entrance thanks to the air conditioner above the door. Produce and packaged food are often displayed in the boxes they were shipped in, and at the back, murky water tanks and bloody beds of ice hold live and recently alive seafood. There's some English on the price tags, but few people in the store speak it.
Chen has tried American grocery stores, but he always ends up back at 99 Ranch. Even after three decades in the U.S., they still prefer to cook and eat Chinese food.
"Your eating habits are the last thing to change when you're trying to adapt to a new culture," said Zhou, the UCLA professor.
The same goes for longtime Alhambrans adapting to the city's new Asian identity. At the new hybrid 99 Ranch on a recent weekday, more than 80% of the shoppers were Chinese.
A white couple, Mike and Kathy, wandered into the store recently and began to explore. They examined the rotisserie chicken cartons under the heat lamp at the front and admired the bread selection at the bakery.
But despite the store's efforts to disguise itself as a Western grocery store, Mike described it as an exotic cultural experience.
They left without buying anything, then drove to Pavilions.
By FRANK SHYONG
AUGUST 11, 2015
One of Arcadia's most heated political battlegrounds is a cozy house on Orange Grove Avenue with a fat brick chimney and bright white shutters.
The 1940s ranch-style home and others like it are increasingly being replaced by larger multi-story homes, a controversial trend that in Arcadia has prompted a yearlong code revision, a lawsuit and most recently, calls to oust the councilmen who voted to allow the Orange Grove Avenue house to be torn down.
Mansionization has been a flash point in communities with rising real estate prices across the Southland. But few markets are as hot as Arcadia, an upscale neighborhood in the San Gabriel Valley, where Chinese nationals are investing heavily, sometimes during "housing tours," in which they snap up multiple properties in one swoop.
Recently, dozens of bright yellow signs advocating for the recall of Councilmen Sho Tay, John Chandler and John Wuo have appeared in yards and road medians across the city.
It's not clear who made the signs, and city officials haven't received any recall petitions, said assistant City Manager Jason Kruckeberg.
Representatives from four of the city's homeowners associations say they weren't involved, and former Arcadia Mayor Mickey Segal, who threatened the council with a recall campaign last month, says he doesn't know who's behind the signs.
But many residents share the sentiment, said David Arvizu, spokesman for the group that's suing the city over the Orange Grove home and another property.
"This isn't just about politics," Arvizu said. "It's about what our neighborhoods are going to look like for the next 50 years."
Neighbors say the mansions ruin views, violate their privacy and are often left vacant. Builders and buyers of the homes point to the higher property values they bring to the neighborhood.
In Arcadia, part of the disagreement is cultural — most of the newcomers are wealthy and Chinese, with lavish architectural tastes that clash with the city's rustic vibe.
A few years ago — concurrent with looser Chinese restrictions on overseas investment — larger homes began appearing in greater numbers in Arcadia's northern neighborhoods, which are protected by powerful homeowners associations that can review architectural plans for proposed homes.
When the associations attempted to block the new home construction, many builders successfully appealed the decisions to the City Council, which has the power to overturn the associations' decisions.
Last year, the City Council decided to update the municipal code and began holding public workshops to determine whether there was a set of revised residential zoning codes that could make both parties happy.
But Tay, Wuo and Chandler voted to halt the code revision process after a residents' group called Save the Arcadia Highlands sued, alleging land use and environmental violations after the council voted to allow a Chinese architect to tear down the Orange Grove property and another home at 1600 Highland Oaks Drive.
Many residents saw halting the code revision as retaliation for the lawsuit. At a later council meeting, Segal threatened a recall campaign if the city didn't resolve the lawsuit within 120 days. "We don't retaliate against the community because someone sues us," Segal said. "Freezing zoning makes no legal or common sense."
Tay said he voted to halt the revision to protect the city from further lawsuits. And the council voted last week to continue revising the parts of the industrial and commercial zoning codes that the lawsuit doesn't affect.
"We all want a code revision. But a lawsuit could cost taxpayer dollars, and the residents would have to pay for that," Tay said.
Fueling the debate is a growing fear that Arcadia, with its large home lots and relatively looser zoning codes, is becoming a place for overseas Chinese investors to park their money. Surrounding cities around Arcadia like Monrovia and Sierra Madre have passed tighter restrictions on tear-downs and mansionization over the last few years.
"We've become an investment haven for foreign investors," said Richard Midgley, president of the Santa Anita Oaks Homeowners Assn. "They're building hotel-sized homes up here."
Arvizu, who is also the lead plaintiff in the lawsuit against the city, said his group is preparing to gather signatures for a ballot measure that would allow voters to approve a set of tighter restrictions on large homes. If the petition gathers enough signatures, it could appear on a ballot as early as April 2016.
Tay agrees the code needs to be revised. But, he added, mansionization is part of a larger trend that has nothing to do with Arcadia's laws or Chinese buyers. As incomes rise, it's natural for home buyers, both domestic and foreign, to want bigger homes, he said.
"A 10,000-square-foot lot with a 7,000-square-foot home, that's too big, I feel," Tay said.
"But that's what people want now."
frank.shyong@latimes.com
We all know that San Francisco is booming, but it's still stunning to see the numbers. According to the Census Bureau, in just 20 years, from 1995 to 2015, the city added 100,000 people for a total population of almost 850,000. For comparison's sake, Washington, D.C. — another boomtown — added 78,000 people over the same period. More dramatic is the growth of the labor force, which increased 25% over the last five years.
Gentrifying L.A. without displacing the poor: Lessons from S.F.'s Tenderloin
For the overall economy, this is good. Population growth fuels jobs and opportunity. But not everyone benefits equally. The working-class residents of San Francisco are straining under the weight of explosive housing costs. Taking into account luxury rentals as well as older developments and rent-controlled units, the Furman Center for Real Estate and Urban Policy at New York University found that, in 2013, themedian rent in San Francisco was $1,491, the highest in the nation.
Limit your view to newer, market-rate units, and the numbers are even more discouraging: According to the real estate start-up Zumper, median rent for a studio is $2,650, while a one-bedroom goes for $3,500. For landlords, these high costs make renovations attractive, leading to more and more evictions. A 2013 report from the city's budget analyst found a 38% increase in all evictions and a 170% increase in Ellis Act evictions — a state law allowing landlords to force out rent-controlled tenants so long as they sell or demolish the building, convert the units into condominiums, or let the property sit vacant for at least five years.
The bulk of these evictions have been in the Mission District, a historically Latino area of the city. Desperate to stem this displacement, area leaders, including Supervisor David Campos, have tried to limit luxury condominiums — the most visible sign of the change — with a 45-day moratorium on construction.
There are really only two ways of dealing with [housing costs]. You can try to make San Francisco less desirable, or you can accommodate demand, which has to mean more building.-
On Tuesday, the Board of Supervisors voted 7 to 4 in favor of the moratorium. But the measured needed 9 votes to pass, so it failed.
This was the right outcome. For as much as it may calm fears — one backer said it was about “saving the Mission District, saving San Francisco and saving the heart and soul of our city” — a moratorium doesn't solve the problem at hand.
Let's go back to the city's population growth. Since 1995, San Francisco has grown by 100,000 people, and almost half that growth has been since 2010. Nonetheless, according to a recent report from Paragon Real Estate, the city has seen just 7,500 new housing units since 2010, and just 33,000 since 2000.
@quielo1 Hmmmm . . . I'm a native of SF, grew up in the Mission District and in the 70s Hispanics were the majority in the Mission. Lots of small businesses were owned/run by Hispanics but they did not own the buildings. With the latest and biggest tech boom in SF those owners are evicting...
VIVIANWANG
AT 12:03 PM JUNE 07, 2015
What happens when demand outstrips supply? Prices go up, of course. And that's what we've seen in the city. Contrary to what some advocates seem to believe, San Francisco can't escape this axiom.
It's the same in D.C., where there are more people and tough building limits. The result is explosive gentrification.
At just 45 days, it's hard to say that the San Francisco moratorium would have mattered, one way or the other. Still, that approach — placing new limits — is counterproductive.
There are really only two ways of dealing with high housing costs and subsequent evictions. You can try to make San Francisco less desirable, or you can accommodate demand, which has to mean more building, and greater density in high-income and desirable neighborhoods.
Not that letting the market do its work is a panacea. The sad fact is that high demand housing markets aren't too keen on affordable units.
To make headway, cities will have to use the fruits of new buildings and new residents — more tax revenue — to preserve a place for low-income residents.
With more revenue, the government can move on new or stalled public housing plans, purchase vacant units for affordable housing and strengthen the city safety net. And it can enhance those efforts with new mandates, like affordable set-asides in luxury buildings. In short, it can throw the kitchen sink at the housing problem.
Some may argue that this solution is a form of trickle-down economics: Let the rich get their condos, and eventually the poor will get shelter, too. But it isn't. It's about local government using the market as a tool to help low-income people preserve a place in their cities. New York City's populist Mayor Bill de Blasio understands that concept, which is why he has committed to a program of new construction.
Many European countries apply a sales tax — called a value-added tax — to almost every transaction. On its face, this is regressive: Because working people spend most of their income on goods, they're hit hardest. But so long as these countries divert revenue to assist the needy, they can achieve progressive goals.
Likewise, when it comes to housing policy, government can harness means that may not seem progressive for ends that benefit everyone.
Jamelle Bouie is a staff writer for Slate.
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