REALTOR®
OFFICIAL PUBLICATION OF THE ARCADIA ASSOCIATION OF REALTORS®
PROUDLY SERVING THE REALTORS® OF ARCADIA, BRADBURY, DUARTE, MONROVIA & SIERRA MADRE
ANNUAL GLOBAL ISSUE!
Introducing the 2017 Global Real Estate Committee See page 11 1
ARCADIA REALTOR® · JANUARY/FEBRUARY 2015
JULY/AUGUST 2017 · ARCADIA REALTOR®
Cooper’s Comments
REALTOR® 2017 ASSOCIATION OFFICERS Sylvia Ramos 2017 PRESIDENT Margaret Garemore PRESIDENT-ELECT Kelvin Chang TREASURER Roy Blume IMMEDIATE PAST PRESIDENT BOARD OF DIRECTORS Ryan Asao Julie Bencosme Cecil Griffin James Maceo Joe Pacilio Yvonne Rosas-Petty Frank Spencer
C.A.R. DIRECTORS Ryan Asao Andy Bencosme Julie Bencosme Roy Blume Kelvin Chang Margaret Garemore Joseph Pacilio Sylvia Ramos Mike Vachani Kelvin Wong
ASSOCIATION STAFF
Robin Allen Ext. 307 Director of Finance / Office Manager Robin@TheAAR.com Michael Beltran Ext. 302 IT Director / Webmaster Michael@TheAAR.com Brenda Faltes Ext. 304 Director of Membership & Professional Standards Brenda@TheAAR.com Stephanie Maertens Ext. 303 Director of Education & Commercial Real Estate Stephanie@TheAAR.com Natasha Poon Ext. 301 Membership Services Manager Natasha@TheAAR.com Laura Thai Ext. 304 Director of Broker Compliance & Member Outreach Laura@TheAAR.com Andrew Cooper Ext. 308 Chief Executive Officer Andrew@TheAAR.com
ARCADIA ASSOCIATION OF REALTORS® 601 South First Avenue Arcadia, California 91006 626.446.2115 PHONE · 626.446.4072 FAX www.TheAAR.com
Thinking Globally While Acting Locally Welcome to the 2nd annual Global Issue of the Arcadia REALTOR® Magazine! Did you know the AAR was one of the very first local REALTOR® associations in the entire country to start a full-fledged Global Real Estate Committee? We’ve been recognized both statewide and nationally for our global achievements and accomplishments. As an example, the AAR has won the prestigious NAR Platinum Global Council Award 3 years in a row. Less than 1% of local associations around the country receive this award so we’re very proud of these achievements. Page 11 of this publication features more details of our Global Committee. The AAR is also one of only a few local associations in the country to have 2 NAR President’s Liaisons to other countries. Kelvin Wong is the PL to Singapore and Nick Zigic is the PL to Austria. PL’s are hand-chosen by the incoming NAR President and their role is to assist the President in fostering and continuing relationships between NAR and each respective country. The AAR is also the Ambassador Association to Singapore and we’ve held this proud distinction for many years. In our ongoing efforts to help our members increase their awareness of real estate in other countries the AAR’s Global Committee has held classes on real estate in Mexico & Cuba. There is a clas on Costa Rica on September 15, see page 11 for details. They also hosted an International Open House featuring information and cuisine from 6 different countries including China, Dominican Republic, Bulgaria, Greece, Singapore & Taiwan. It was such a smashing success they are planning another one in November! Did you know the AAR is hosting an International Education Cruise to Vancouver, Canada in April, 2018??! The cruise is featuring 5 acclaimed speakers speaking on a variety of outstanding topics. Cabins are booking now and they start at just $198. Complete details can be found on our very own cruise website, www.RECruises.com, on the AAR website and on page 11. The AAR is also the very first AOR in the country to offer ZipForms training in another language! The next class is Wednesday, September 13, 2017. This is yet another example of the AAR being on the cutting edge when it comes to servicing our foreign-language speaking members. Continuing that theme, by design our staff speaks 5 different languages to serve our diverse membership: English, Spanish, Cantonese, Mandarin and Chiu Chow. Now while I don’t speak a foreign language I do hold dual citizenship between the United States and the United Kingdom. So if you have a client from East London and you can’t understand their Cockney accent, give me a call and I’ll help translate, Gov-na! On behalf of our 2017 Global Business Committee Chair, Kelvin Wong, and the entire Global Business Committee we look forward to seeing you at one of our many Global events very soon. A world of thanks for being a valued member,
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ARCADIA REALTOR® · JULY/AUGUST 2017
Andrew Cooper Chief Executive Officer
JULY/AUGUST 2017 | VOLUME 21 | NUMBER 4
Contents 11
13
16
On the Cover
Regular Features
11 Committee Highlight - Global Real Estate Global Committee offers programs to provide global education and networking opportunities through our mixers, webinars & presentations.
2
Cooper’s Comments
Additional Content
4
Market Matters
7
Attorney Comments Dave Freeman, AAR Legal Counsel
12 Committee Highlight - Grievance As REALTORS®, we agree to abide by our professional rules of conduct known as the Code of Ethics.
Through the Lens
13 Don’t Get Lost in Translation How can translation tools be used with minimal risk? -The answer is with caution.
Affiliate Corner
16 The Chinese Pursuit of the American Dream Chinese citizens are the top foreign buyers of homes in the U.S. As Beijing cracks down on money going abroad, will America’s real estate market feel the impact?
5
6
8
Andrew Cooper, Chief Executive Officer
Market Statistics for the San Gabriel Valley
A Look at What’s Happening Around the AAR
“Stay Friends with Your Title and Escrow Professionals” Joseph Haggerty, WFG National Title Company
AAR New REALTOR® Members The AAR welcomes its newest REALTOR® Members of 2017.
JULY/AUGUST 2017 · ARCADIA REALTOR®
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Market Matters Market Statistics for the San Gabriel Valley - May 2017 Single Family Homes
City
Arcadia Arcadia Duarte El Monte El Monte Glendora Glendora Monrovia San Gabriel San Gabriel San Marino Sierra Madre Temple City
Zip Code
91006 91007 91010 91731 91732 91740 91741 91016 91775 91776 91108 91024 91780
Condominiums
Sales of Price Price % Single Family Median SFR Chg from Homes ($1,000) May 2016
32 10 7 9 10 19 23 26 24 18 17 8 22
$1,115 $1,005 $500 $470 $461 $559 $662 $612 $852 $618 $1,980 $1,100 $733
27.1% -13.6% 14.4% 8.0% 3.6% 25.6% -2.4% 6.6% -2.6% 2.9% -8.3% 36.4% -4.1%
SFR Only
Price Median Price & Median Condo Chg from Home Price/ ($1,000) May 2016 Sq. Ft.
Sales Count Condos
11 19 5 3 9 7 6 13 1 5 0 0 5
$830 $615 $460 $430 $395 $360 $505 $485 $526 $580 n/a n/a $625
24.1% 12.8% 31.4% 2.4% -10.2% -10.7% 0.9% 2.1% 36.5% 1.0% n/a n/a -11.1%
$565 $605 $405 $398 $372 $353 $408 $489 $510 $438 $905 $547 $491
Market Statistics for the San Gabriel Valley - June 2017 Single Family Homes
City
Arcadia Arcadia Duarte El Monte El Monte Glendora Glendora Monrovia San Gabriel San Gabriel San Marino Sierra Madre Temple City 4
Zip Code
91006 91007 91010 91731 91732 91740 91741 91016 91775 91776 91108 91024 91780
Condominiums
Sales of Price Price % Sales Single Family Median SFR Chg from Count Homes ($1,000) June 2016 Condos
34 12 17 2 9 15 40 35 17 6 13 14 22
$1,080 $1,374 $458 $493 $456 $513 $680 $738 $800 $698 $2,702 $1,075 $680
ARCADIA REALTORŽ ¡ JULY/AUGUST JANUARY/FEBRUARY 2017 2016
-6.4% 17.4% 0.0% 12.1% 6.8% -3.0% 1.5% 13.9% 1.4% 11.6% 20.1% 18.8% -12.5%
10 11 12 1 13 1 6 11 1 3 0 2 8
SFR Only
Price Median Price & Median Condo Chg from Home Price/ ($1,000) June 2016 Sq. Ft.
$809 $501 $475 $549 $490 $330 $504 $555 $445 $718 n/a $614 $689
7.9% -14.1% 13.4% 41.5% 31.0% -4.3% 2.8% 23.3% -31.0% 38.9% n/a -3.8% 31.2%
$535 $721 $396 $369 $376 $409 $392 $476 $527 $549 $909 $572 $515
Source: CoreLogic.com
Attorney Comments
By Dave Freeman, Association Counsel
Listing Agreements Signatures The California Appellate Court recently allowed a broker to present extrinsic evidence that the sellers (there were five) were aware, and approved, that one of them had signed a listing agreement with the broker. (The four other owners then prevented the sale, claiming they had not signed the agreement). The point to learn here is to check the title to be sure you have all the necessary signatures on the listing and sale agreement. In this unique case, the broker may prevail, but it cost a lot of time and money to find out.
Tree Trimming Homeowner-A’s trees were growing to block the view of Homeowner-B, in an expensive neighborhood with a Home Owner’s Association (HOA). All HOAs have CC&Rs, which contain covenants, or agreements, that are recorded and which control the actions of the current and future owners’ actions. Some HOAs have rules to prevent the blockage of neighbors’ views with one’s trees. This HOA had such a rule in their Covenants. When A refused to trim his trees, the HOA trimmed them, leading to a lawsuit by A. The court ruled against A, because the tree trimming covenant, was recorded, and therefore a matter of public record. Be sure your buyers are aware of the rules, regulations and covenants of the properties they are purchasing. Although there is no such thing as a prescriptive easement for light and air (view), some rules and covenants, may grant them, and if the buyer is on notice of them (recording = public/constructive notice), he/she must abide by them.
Fair Housing Laws Things a REALTOR®/ Manager Should Not Say Fair housing rules are in place to prevent discrimination in housing and commercial property dealing. One often overlooked area covered by these rules pertains to statements that might be considered “steering.” Things a REALTOR®/Manager (of houses, apartments or commercial properties) should avoid stating include: a. The economic standing of the residents in the neighborhood. b. The predominant ethnic background of the folks in the area. c. The local crime rate. d. Any other similar statements that might appear to be encouraging or discouraging people to buy or rent in a particular area or neighborhood. Recently an agent was fined $8,000 for failing to comply with the current version of this rule. Steering might be in play, for instance when a REALTOR® suggests a potential purchaser or lessee might be more comfortable purchasing, living or leasing in a different community due to any of the above reasons.
JULY/AUGUST 2017 · ARCADIA REALTOR®
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THROUGH THE LENS A Look at What’s Happening Around the AAR
ald Oskar Gruenw mber-for-Life Honorary Me
kfast Annual Membership Brea
2018 AAR Board of Directors
Beer Events 4 Charity
and Wine Fest
Mary Pacilio & Bobbi Martinez
Mark Ramos, LA County Supervisor Janice Hahn & Sylvia Ramo s
Shirley Chen & Vanessa James
Andy Bencosme, Vincent Dudziak, Tim Cragoe & Chris Shevlin
Mike Vachani, Duan e Morrison, Rosanna Morrison & Ryan Asao
John Baker being presented with REALTOR® Emeritus
ith Phil Atwan
1031 Exchange w 6
LA County Supervisor Ja nice Hahn Welcome Reception
ARCADIA REALTOR® · JULY/AUGUST 2017
Legislative Break fast with Congre sswoman Judy Chu CA 27th District
(Yvonne-Rosas Petty, Daniel Petty, Elle n Burry, Congresswoman Judy Chu, Margare t Garemore, Diana Rafeedie, Nick Zigic, Andrew Cooper & Cecil Griffin)
Welcome, New Members! NEW REALTORS® JULY 2017 Jake J. Barbosa, Supreme Investment Corp.; Brian B. Brooks, Century 21 Adams & Barnes; Yingchen Cai, US National Realty; Alice Chen, RE/Max Omega Monrovia; Di Chen, Resource Real Estate Services; Jialin Chen, Coldwell Banker Dynasty Arcadia; Sean K. Fang, Atlas Real Este Group; Guillermo Garica, Lee & Associates Investment Services; Mary A. Gomez, Century 21 Village Realty;
Denise H. La, August Pine Real Estate; Cory J. Lai, ALTC Realty; Frank R. Lam, Coldwell Banker George; Fay Lee, Coldwell Banker Dynasty T.C.; Joonho Ryan Lee, ALTC Realty; Xiao Cash Li, Keller Williams Realty; Wang W. Lin, Supreme Investment Corp.; Wei Fred Lin, Century 21 Masters; Xin Lu, IRN Realty;
Stephanie G. Munoz, ALTC Realty; Mark A. Mynhier, Keller Williams Executive; Jennifer J. Shuey-Roller, Century 21 Ludecke Inc.; Yuk Siu, IRN Realty; Daniel C. Wang, Admac Real Estate & Dev. Inc.; Kun Wang, Treeline Realty & Investment; Chang Carol Xu, Whole America United R.E. Group;
Also shown: Julie Bencosme, 2017 Membership Committee Vice-Chair; Sylvia Ramos, 2017 AAR President and 2017 Membership Committee Chair, Shirley Chen
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Branch Manager NMLS: 168532 626-486-9968 (Direct) 626-664-3106 (Mobile) 124 N. Glendora Ave., #101 Glendora, CA 91741 ldavis@primelending.com www.primelending.com/ldavis
Senior Loan Originator NMLS: 482962 626-755-5764 (Direct) 420 South Myrtle, #B Monrovia, CA 91016 dbalsamo@primelending.com lo.primelending.com/dbalsamo
All loans subject to credit approval. Rates and fees subject to change. Mortgage financing provided by PrimeLending, a PlainsCapital Company. Equal Housing Lender. © 2017 PrimeLending, a PlainsCapital Company. PrimeLending, a PlainsCapital Company (NMLS: 13649) is a wholly owned subsidiary of a state-chartered bank and is licensed by: the Department of Business Oversight under the California Residential Mortgage Lending Act - lender lic no. 4130996.
JULY/AUGUST 2017 · ARCADIA REALTOR®
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AFFILIATE Corner “Stay Friends with Your Title and Escrow Professionals” By Joseph Haggerty, WFG National Title Company
It’s Thursday morning, final week of the month and your escrow still has buyer contingencies, inspection reports are still not received, your lender hasn’t met all of their exceptions and escrow needs to close by end of business on Friday. Whoa… We all see these situations frequently in this industry. When it comes to title and escrow requirements, we can make things pretty simple if the communication is there from the start. Let’s start with that new listing. You are ready to put it on the market and your client tells you what they think you need to hear. We sometimes expect them to know what to tell us but as simple as real estate can seem, homeowners have no clue how it all works and what we are talking about and they leave out many important details. Vesting is very important and probably one of the most common issues to clear up in most escrows. It’s not always complicated but it’s something that should just be addressed even before escrow opens. We can have a look by pulling copies of any transfers going back to the last point of title insurance and get a rough idea of which parties may need to come forward during escrow. Once you have your prelim, look to see that your seller is the vested owner and watch out for the words “subject to…” in the prelim’s vesting. This means that a previous transfer of title needs to be addressed or cleared up. A statement of information will be required by these individuals as well and should be given directly to escrow as the SI has confidential information. In an ideal situation, the SI will be checked once around the beginning of escrow and again the day before closing. Those times that you hear about a last minute lien showing up, it’s usually because the SI was delivered to title just days before closing… not good. If a property is vested in a trust, be sure to request a copy of the trust agreement and be ready to give that to escrow for review. As your closing partners, we do need to be formally instructed by escrow to do certain things so being proactive is your best approach. Escrow is waiting on several other items as well from the moment escrow opens. It doesn’t hurt ask what they may need up front. If there is an HOA, send them HOA contact information as soon as possible so they can order docs. If a compliance/occupancy report is required for that city, be sure to order it as soon as you know your property is selling. These reports can sometimes take longer than a short escrow period and are sometimes one of the final items received. How about all those items on the prelim that just seem to read like foreign language? How do you advise your buyer’s to sign off on their acceptance of the preliminary title report? Ask for copies of those documents and ask for a trusted title professional to give you an idea of the effects of those items. Many easements often have an easy explanation. Remember, title and escrow people handle a much larger volume of transactions than any realtors. We see situations on a monthly basis that the average agent might only see once in their career. If you are ever in doubt or something does seem right, reach out and let’s make this a team effort so our buyer and seller’s dreams come true! Disclaimer: Contents of this article are meant to be informative and by no means a form of legal advice. For more information and questions, please contact Joseph Haggerty at jhaggerty@wfgtitleco.com 8
ARCADIA REALTOR® · JULY/AUGUST 2017
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ARCADIA REALTOR® · JANUARY/FEBRUARY 2015
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ARCADIA REALTOR® · JANUARY/FEBRUARY 2015
Global Real Estate Committee By Kelvin Wong, Committee Chairman A recent highlight from the 2017 Global Profile of International activities by the Global Councils of National Association of REALTORS® showed that the foreign buyers purchased $153 billion of U.S. residential property from April 2016 till March 2017. It represents an increase of 49% during the previous 12-month period. China remained as the top country of origin for foreign buyers followed by Canada, the United Kingdom, Mexico, and India. Whereas Florida, Texas, California, New Jersey and Arizona accounted for 54% of the total residential property purchased by International Buyers. At the Arcadia Association of REALTORS®, our Global Committee continues to offer programs to provide global education and networking opportunities through our mixers, webinars and presentations to all our members. At the beginning of the year, the committee offered Chinese New Year Mixers featuring Residential and Commercial Real Estate by Johnathan Ng, a famous Feng Shui Master. It was followed by a webinar to showcase “Retirement in Cabo San Lucas”. In May we offered an “International Open House” to introduce different culture, real estate trends and offered authentic food and drinks from 5 countries namely Bulgaria, China, Dominica Republic, Singapore and Taiwan. All these events, which drew great interest, were offered FREE to our members and were well attended. For the remaining of the year, the committee will continue to offer Global mixers “Cuba and its Emerging Real Estate & Economy” in August, “Real Estate in Costa Rica” in September and bring back the 2nd round of “International Open House” featuring another 5-6 countries! Our Educational Cruise Task Force (consisting of members of the Global and Educational Committees) is so excited to offer a 3-day educational cruise from Los Angeles to Vancouver with optional property tours in both Los Angeles and Vancouver, Canada for April 24-27, 2018. The cruise is accepting registrations now! For more info please visit, www.recruises.com. If you or anyone you know is interested to join the Global Committee at the AAR, please feel free to contact Kelvin at kelvinwong@att.net or contact Natasha Poon at natasha@ theaar.com. Our committee is looking forward to meeting you! Thank you!
IN FO CL O U D D ED !
COMMITTEEhighlight AAR GLOBAL COMMITTEE PRESENTS:
Friday, September 15 3:00pm-5:00pm AAR Members: FREE Non-Members: $15 Arcadia Association of REALTORS® 601 South First Ave., Arcadia, CA 91006
Live Presentation with Guest Speaker: Allen Lungo, President of Costa Rica Global Association of REALTORS®
Authentic Costa Rican cuisine will be served by San Gabriel Valley US Bank Team
Register online at www.TheAAR.com by clicking the event name under “Upcoming Events” www.TheAAR.com ~ 601 S. First Ave. Arcadia, CA 91006 ~ 626-446-2115 ~ Fx. 626-446-4072
international education adventure! - aboard the Ruby Princess April 24-27, 2018 | Los Angeles to Vancouver
welcome aboard!
education supplement
Participants will enjoy a unique international real estate learning adventure at sea and exclusive networking opportunities and 5 renowned speakers (more to be announced)
*applicable to real estate agents only
passport required (cannot be expiring within 6 months of travel dates)
Early Bird: ONLY $149 For 5+ Speakers (before November 1st)
Regular: $195 For 5+ Speakers (after November 1st)
YOUR STATEROOM IS READY!
RESERVE TODAY
Stateroom Type
Starting Double Occupancy Rate*
Starting Single Occupancy Rate*
3rd and 4th in Room (Limited)*
Mini-Suite
$649/pp
$1,298/pp
$299/pp
Balcony
$499/pp
$998/pp
$299/pp
OceanView
$369/pp
$738/pp
$199/pp
Interior
$349/pp
$698/pp
$198/pp
*In addition to Education Supplement. Airfare is not Included. Meals in the main dining room, buffet, snacks, rooms service are all included. Alcoholic and non-alcoholic beverages are available for purchase.
see reverse for itinerary and more info JULY/AUGUST 2017 · ARCADIA REALTOR®
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COMMITTEEhighlight Grievance Committee By Margaret Garemore, Committee Chairperson The Grievance Committee is a select group of AAR REALTORS® and Broker members who are charged with the responsibility of reviewing all Grievance Complaints that come into the Association. We currently have about 24 members on the 2017 Grievance Committee. The real estate profession is self-governing when it comes to ethics violations and we have a three-tier system of processing that starts at the Grievance Committee. A complaint is rarely dismissed and will normally go up to the next level for a Professional Standard Hearing. Lastly the hearing panel’s decision is reviewed or ratified by our Board of Directors. The committee members are held to the highest of privacy and confidentiality standards. Meeting are relatively infrequent and we only meet when a Grievance Complaint is filed or if we have other business to discuss. We are a closed committee, do not hold events nor do we raise money. Our sole purpose is to review Complaints filed by other REALTORS® or members of the public alleging violations of the NAR® Code of Ethics.
GRIEVANCE COMMITTEE PROFESSIONAL STANDARD HEARING BOARD OF DIRECTORS
NEW AAR BENEFIT!
Lockbox Lease Program! AAR REALTORS® are now able to lease a Lockbox for only $9.95(plus tax) a month! CALL AAR FOR DETAILS! 626.446.2115 12
ARCADIA REALTOR® · JULY/AUGUST 2017
MARK WU 626-281-6854 CA Insurance Agent #: 0720074
Don’t Get Lost in Translation By Charlee Gibson, Marketing Coordinator, National Association of REALTORS® Commercial & Global Services We recently shared an article on the NAR Global Facebook and Twitter pages about a new earpiece that can translate languages in real-time, and it got us thinking. -What if a REALTOR® tried using this device or a similar technology and lost the deal do to a mistranslation? Not only would this cost the REALTOR® time and money, it could also cost them their reputation. This begs the question; how can translation tools be used with minimal risk? -The answer is with caution. This post isn’t meant to deter you from using such technology, but rather warn you to tread lightly and explain some basic complexities of language. Language is a tricky thing. Some things to consider when recognizing the differences in language and working with a translation tool are:
- Varying alphabets/symbols - Differences in sentence structure - Semantics - Idioms and expressions - Grammar usage, or lack thereof - Tone - Non-verbal communicators
These bullet points show that there’s a lot going into an accurate translation, and explain why companies are still perfecting the technology. There’s a lot to consider, and technology alone might struggle to convey things like tone and body language. These can completely change what’s being said, especially with languages like Thai that are completely tonal. Thai is broken into five different tones, and depending on the tone in each syllable of a word you could be saying a completely different sentence then what you meant. Essentially, tone doesn’t always indicate sarcasm, approval or disapproval like English and many other languages, but rather what the literal translation is. One example of translation gone wrong is in 2009 when HSBC bank launched a $10 million rebranding campaign to fix damage done from its tagline “Assume Nothing.” The tagline was mistranslated as “Do Nothing” in some countries, which doesn’t bode well for getting consumers to act on using your services. It’s important for any global brand, whether it be one of the largest banking institutions in the world or a single REALTOR®, to pay attention to detail when it comes to what is being said to foreign clients. Using tech to translate units of measurement or currencies is okay, but leave the conversations to those who are fluent. Hire a translator or bring someone on your team who is bilingual. Or try learning a new language for yourself. Even if you aren’t fluent, knowing a couple basic phrases in your client’s native language could go a long way. Stick with simple phrases like “hello” and “thank you.” Though translation tech has a long way to go, we can all still help improve language barriers with a little extra effort. JULY/AUGUST 2017 · ARCADIA REALTOR®
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Florida, Texas, and California: Top State Destinations Among Foreign Buyers in April 2016–March 2017 By Scholastica (Gay) Cororaton, Research Economist Five states accounted for slightly more than half of all foreign buyers who purchased U.S. residential property in April 2016– March 2017: Florida (22 percent), Texas (12 percent), California (12 percent), New Jersey (four percent) and Arizona (four percent), according to NAR’s recently released 2017 Profile of International Activity in U.S. Residential Real Estate. Other preferred destinations were Illinois, North Carolina, Georgia, and New York.[1] Proximity to the home country, the presence of relatives, friends and associates, job and educational opportunities, and climate and location appear to be important considerations in deciding where to purchase a property. Florida and Arizona attracted buyers from Latin America, Europe, and Canada who tend to purchase properties in warm climates for vacation purposes. California and New Jersey drew Asian buyers, most likely for reasons related to geographic proximity, cultural similarities, and job opportunities. Texas, which is physically close to Latin America and home to a large Latino population, attracted buyers from Latin America and the Caribbean as well as Asian buyers. Most Canadian buyers purchased residential property in Florida, Arizona, California, Texas, Georgia, Minnesota, and Nevada. Canadian buyers typically purchase properties for use as vacation homes, so they tend to locate in states with warm climates and resort areas. The increase in resident Canadian buyers may have helped put Minnesota on the list of major destinations in 2017. More than a third of Chinese buyers purchased residential property in California, most likely because of its proximity to and cultural affinity with Asia. Texas, Florida, Illinois, New Jersey, Massachusetts, New York, Indiana, and Virginia were also preferred destinations.
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ARCADIA REALTOR® · JULY/AUGUST 2017
Compared to other major foreign buyers, Indian buyers are not as concentrated in any state. While California, New Jersey, Texas, Massachusetts, and Kentucky were top destinations, more than two in five Indian buyers purchased in another state. Most Indian buyers purchased properties to use as a primary residence in these states where they most likely found jobs. Most buyers from Mexico purchased properties in Texas and California, which are both geographically close to and have cultural similarity with Mexico. Other states in the South and West regions of the United States such as Arizona, Tennessee, Colorado, Florida, South Carolina, and Alabama were also major destinations. U.K. buyers mainly purchased residential property for vacation use. Two-thirds of U.K. buyers purchased in the warm-weather states of Florida, Arizona, California, Texas, and Georgia. REALTOR.com provides data on the market interest of global buyers searching for properties in the United States (see Global Buyers Searching in the United States). [1] The term international or foreign client refers to two types of clients: Non-resident foreigners (Type A) who are non-U.S. citizens with permanent residences outside the United States, and who typically purchase property as an investment, for vacations, or other visits of less than six months to the United States; Resident foreigners (Type B) who are non-U.S. citizens who are recent immigrants (in the country less than two years at the time of the transaction) or temporary visa holders residing for more than six months in the United States for professional, educational, or other reasons. JULY/AUGUST 2017 ¡ ARCADIA REALTORŽ
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and 61 percent of all sales were made in suburban areas.
The Chinese Pursuit of the American Dream By Linda Poon, Assistant Editor, CityLab One of the latest listings in the Seattle-area real estate market boasts a newly renovated home with seven bedrooms, heated floors, and a “spacious and tranquil” feel inside the quiet suburb of Sammamish. It’s asking price: $1,260,888. Another listing— this one in Bellevue, with much grander amenities like a builtin sauna and a private tennis court—is priced at a staggering $6,888,000. The prominence of the number eight here is likely no coincidence. Both listings are found on Juwai, one of the largest online portals for Chinese citizens looking to buy property overseas (the name translates to “living abroad”). And the number eight, according to Chinese superstitions, is considered lucky. As China furiously erects high-rises for its ever-growing population, wealthy mainlanders have been seeking out the American dream in the suburbs of… well, America. Not even the harshest of anti-immigrant rhetoric in the U.S., nor the toughest of foreign investment regulations from China, has substantially deterred them. At least not yet. “Many Chinese who grew up in the high-rises of those big cities in China see having a backyard as an attractive [alternative],” says Lawrence Yun, chief economist and head of research at the National Association of REALTORS® (NAR). Single-family homes are also more attractive to Chinese investors, he adds, because they’re generally more abundant than affordable condos in popular destinations like Los Angeles and New York City. According to a recent report by NAR, Chinese buyers have been the top foreign buyers of U.S. residential property for three straight years, hitting a record high. As a group, they surpass top buyers from Canada, the U.K., Mexico, and India. Between April 2016 and March 2017, Chinese buyers purchased more than 40,500 housing units, worth a total of $31.7 billion. That’s up from of 29,000 units and $27.3 billion the year before. Sixty-seven percent of those units were single-family homes, 16
ARCADIA REALTOR® · JULY/AUGUST 2017
With housing prices on the rise, Chinese buyers are also looking beyond just California and New York, which have been popular thanks in part to the prominence of Chinese culture there. Texas, Virginia, Florida, and Indiana, for example, have become top destinations this year, according to NAR, as buyers expand their geographical reach in search of a better bang for their buck. And while Washington state didn’t make it to NAR’s top destinations (NAR analysis actually found investment there declined), data from Juwai suggest that the top market so far this year lies in the greater Seattle area. The area saw an influx of foreign interest last year after neighboring Vancouver (another hotspot for Chinese investors) imposed a 15 percent tax on foreign buyers. In particular, college towns have flourished over the years as Chinese students move to American colleges and their parents opt to buy rather than rent. “It’s a perfect match,” says Susan Wachter, co-director of the Penn Institute for Urban Research at the University of Pennsylvania, referring to the growing wealth in China and the desire for an American education. “Instead of spending the money on rent for three, four years, why not just invest in property? You’re going to come visit it anyway.”
The Impact of Foreign Investors Chinese investors are surely welcome business for sellers, who hope to attract buyers with customized homes adhering to feng shui principles, and developers breaking ground on new projects, including luxury high-rises and McMansions catering specifically to that group. On average, Chinese buyers spent $781,801 on a home in the 12 months before March 2017— that’s more than $200,000 above the average spent by buyers from the next leading countries. “The U.S. real estate market has always been out there as a risk diversifier [for Chinese millionaires and billionaires] who are quite aware about the potential for a bust in China,” Wachter says. Wealthy buyers have even shelled out millions for a home (or multiple homes, many of which were bought for investment purposes and sit empty), sometimes paying as much as 40 to 60 percent above the asking price—and often in cash. In fact, according to the NAR report, more than two thirds of sales made by Chinese buyers were paid in cash. That spells big business for smaller cities where a $200,000 home is on the higher end of the market—but bad news for American homebuyers. And while the data isn’t conclusive across the board, the influx of foreign buyers could play a role in limiting housing affordability. When it comes to the bidding process, for example, American homebuyers who require mortgages are
no match for those who can dole out the entire payment in cash and close a deal in a matter of days. “The fact that the Chinese are buying more on the high-end markets perhaps means they’re not directly competing with first-time buyers in the U.S.,” says Yun. “But the fact that they are gobbling up inventory just means they’re pushing the local housing market upward.” In Seattle, where housing prices have doubled in the past five years, growing twice as fast as the national average since 2016, officials have have considered a tax on foreign purchases— similar to the one that drove buyers to the area from Vancouver. The debate has even made its way into this year’s mayoral battle, according to the Seattle Times. But asked if other American cities might follow those very footsteps, Yun says it’s unlikely that cities will deter foreign investment anytime soon. Cities, after all, can stand to benefit from the extra money collected through property taxes.
China Cracks Down Will China’s latest crackdown on money leaving the country put a damper on the Chinese pursuit of the American dream? Not likely, says Yun, though it certainly does have the U.S.—and global—real estate market on edge. The new measures, introduced in January, toughen the enforcement on a long-standing regulation that limits Chinese buyers to exporting no more than $50,000 in a year. Among other things, they also tighten scrutiny over what people do with the money by requiring investors to disclose their plans. Banks are also instructed to deny transactions for overseas property purchases if illegal activity is suspected. This is partly intended to curb the record amount of cash leaving China’s borders and partly to stem the smuggling of billions of dollars overseas by corrupt officials and businessmen.
Chinese may no longer be a hot commodity. That could further affect the American middle class, but Yun says more data is needed. Another loophole may be to scrap the convenience of allcash payments and make use of mortgages. As for all those international students who need to be housed during their stay in the U.S.? They and their parents make up a large part of demand for U.S. housing, and so far, the new restrictions are unlikely to affect them. That’s also the case for those pursuing EB-5 visas and those looking to make property purchases for medical care and holiday purposes, according to Juwai. In terms of location, “buyers are not giving up on L.A., Seattle, or New York,” Sue Jong, chief of operations at Juwai, tells CityLab in an email. All three cities, along with Houston and Orlando—both of which have long seen growing demand from Asian buyers—are among Juwai users’ top five searches. “In fact, the top five cities received a slightly larger share of all inquiries so far in 2017 than in 2016,” she adds. So for the time being, it looks like Chinese will continue to pursue the American dream—or for some, take advantage of it for investment purposes. But perhaps for some families, the seven bedrooms or additional sauna will no longer be in the picture.
But Yun says the U.S. won’t see a huge slump in foreign purchases anytime soon, especially as China’s economy grows. Data from Juwai suggest that buyers aren’t fazed by the tighter controls: Searches for U.S. property actually grew by 42.7 percent in February. For one thing, Chinese buyers have been pretty creative in skirting past capital control rules. “[A buyer] may have 10 neighbors send money abroad and combine them in the U.S. to buy that one property, and then he or she would repay those neighbors,” says Yun, referring to a (legal) process known as smurfing—though China’s new measures aim to close that loophole, too. Still, Juwai has already detailed three workarounds for the latest regulations. One is for home buyers to pivot to more moderately priced homes, so it’s easier to put together the money needed for a down payment. The company’s data show that so far in 2017, searches have slightly increased for homes less than $500,000. The median price that property users searched for fell 15 percent, from $382,995 last year to $325,000 so far this year. That means these mega mansions built specifically for the JULY/AUGUST 2017 · ARCADIA REALTOR®
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