We Support AREAA And REALTORS® In Helping Homebuyers Realize The Rewards Of Homeownership As a REALTOR®, understanding the complex purchase market and working with the right lender can go a long way toward building your bottom line. That’s where we come in! You can feel confident knowing Wells Fargo Home Mortgage has the strength and stability of a well-established lender. With our value-added programs and services, including FHA home financing, you can help make your homebuyers’ goals a reality. As the #1 lender of FHA loans1, we provide: • Options — Your clients can choose from fixed-rate payments or adjustable-rate2 introductory products • Flexibility — A wider range of income, debt, credit, down payment and closing cost options allowed vs. conventional loan products • Convenience — Your buyers may qualify for low down payments on the purchase price of the home with no mortgage payments held in reserve • Assumable — Qualified buyers may be able to take over the seller’s existing mortgage and interest rate • Opportunities — Your clients may be eligible for increased loan amounts in certain metropolitan areas with higher housing costs3
Email WFHMAsian@wellsfargo.com to schedule a custom FHA seminar for your agents. 1. Based on first quarter 2008 statistics by Inside Mortgage Finance 6/6/08. 2. Rate is subject to increase after consummation. 3. Increased FHA loan amounts are only available on loans approved by December 31, 2008. Increased conforming loan amounts are only available on loans closed through December 31, 2008. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2008 Wells Fargo Bank, N.A. All rights reserved. #59667 8/08-11/08
JANUARY VOLUME
/ FEBRUARY 2009 1, NUMBER 2
F EATURES 4
Accepting Only Excellence BY SCOTT HOOVER Allen Chiang takes over the reins and looks to push AREAA to the next level
30
Real Estate Across the Pacific BY SCOTT HOOVER Views from an Asia and U.S. Perspective
38
Navigating the Waters BY JOHN HASKELL Implement a business plan and set a course to avoid rough seas
42
FHA is in Right Place at Right Time for AREAA Customers BY GLENDA GABRIEL
46
Credit Where it’s Due BY EDWARD JAMISON Consumers need to know there is more to good credit than making payments on time
50
Working Together BY SCOTT HOOVER Diversity allows Houston’s Asian American community to continue to grow
58
Existing Home Sales Slide NATIONAL ASSOCIATION OF REALTORS Tight mortgage availability
60
Partner Up BY SANDY SEEKINS The importance of real estate industry partnerships
62
3rd Annual Asian American Real Estate Convention & Gala BY PRAVEEN SHARMA Los Angeles event points to business opportunities and the importance of education
D EPARTMENTS 2
Editor’s Letter A message for 2009
8
Economist Outlook A truly Global Economy
16 Development Spotlight — Shanghai China’s largest city, and the showpiece of the world’s fast growing economy, focuses on residential real estate
ON THE COVER Houston’s Asian American community thrives BY SCOTT HOOVER
January / February Advertisers Bank of America Mortgage . . . .BC Century 21 Southwest . . . . . . . .41 Prudential . . . . . . . . . . . . . . . . . . .7 Wells Fargo Home Mortgage . .IFC
Upcoming AREAA Events AREAA East Convention & Gala . . . . . . . . . . . . . . . . . . . .IBC
EDITOR ’ S NOTE
are ASIAN
REAL
ESTATE
JANUARY / FEBRUARY 2009 VOLUME 1 — NUMBER 2 Editor-in-Chief Creative Director
Jim J. Park Praveen K. Sharma
Publisher/Editorial Director Jon Ruzan Advertising Sales Manager Scott Hoover Editor Scott Hoover Production Manager/Art Director Debbie Maxwell Financial Controller Kim Gallaher Editorial & Advertising Office Address A|R|E: Asian Real Estate Magazine c/o Banat Communications 23425 N. 39th Dr., #104-193, Glendale, AZ 85310 Tel (623) 516-2723 Fax (623) 516-7738 E-mail: jon@banatcommunications.com A|R|E Office Address (Membership Information) AREAA 5740 Fleet Street, Suite 155 Carlsbad, CA 92008 Tel 760-918-9162 Fax 760-918-6924 E-mail: contact@areaa.org Article Submissions/Press Material To submit any material including articles and press releases, please e-mail: scott@banatcommunications.com or mail to the Editorial Offices using the information above.
A|R|E is published by the Asian Real Estate Association of America (AREAA) for its members. Information concerning the contents can be obtained by directing correspondence to the Editor. AREAA is national professional trade organization dedicated to creating greater opportunities for homeownership in the Asian Pacific American Community. ©2008 by Asian Real Estate Association of America. Reproduction in whole or part without permission is prohibited. All rights reserved. Opinions expressed by individual authors are not necessarily the opinions held by AREAA. Article Reprints To order reprints of individual articles, please contact The Reprint Dept. Tel: (717) 481-8500, fax: (717) 481-7677 or e-mail: wholliday@reprintdept.com.
Asian Real Estate (ISSN#: PP1) is published bi-monthly for $35.70 for the Asian Real Estate Association of America by Banat Communications, 23425 N. 39th Dr., #104-193, Glendale, AZ 85310. Periodical Class Postage Pending Approval at Glendale, AZ and other mailing offices. POSTMASTER: Please send address changes to: Banat Communications 23425 N. 39th Drive, #104-193 Glendale, AZ 85310
A Message for 2009 As we close out 2008, one cannot help but reflect on this year with disbelief and confusion. There were signs of trouble in the industry for some time, particularly within the subprime lending industry as the red-hot real estate market started to show signs of major stress. Option One, New Century, Ameriquest and many other subprime players began their quick downward slide in 2007, but the big seismic event that started the dominos falling was the precipitous drop in Bear Sterns stock price and then a government orchestrated purchase by JP Morgan Chase. At the time, it happened so fast that no one really knew how and what happened to this storied institution. However, the unraveling of the industry was just beginning. Some of the major pillars of the industry such as Lehman Brothers, Countrywide, WaMu, Wachovia, Fannie Mae and Freddie Mac faced unprecedented challenges and changes in management and ownership. No one could have predicted the magnitude of the problem and the massive repercussions. As the capital market scrambled for a lifeline, small-business owners and independent real estate professionals felt the cold reality of the real estate downturn. Many who depended on the real estate economy for their livelihood had to find new jobs and had to retool themselves for the future. So, what is the prospect for the future of our industry as we enter 2009? What can we do to help the millions of homeowners who will find themselves days away from losing their American Dream? There are many questions but very few answers. It is gong to be a long winter. No doubt, this year has given us a life long lesson about what happens when reason and fairness is thrown to the winds and we allow short-term gains and greed to shape our judgment. However, enough with the blame
a r e ASIAN
REAL
ESTATE
Your opportunity to link between U.S. And Asian real estate game and let's focus 2009 on working together to get the housing market back on track. We need to use this time to enhance the professional standards of the real estate market. We must take strong stance against those unscrupulous players that have damaged our industry. We must focus on the long-term
A|R|E magazine brings together the broad Asian American marketplace in the U.S. with Asian overseas real estate interests in a high-end
interest of the homeowners. We need to work with the government and the
real estate business and
private sector to create new tools and options for existing homeowners and
lifestyle magazine.
future homebuyers. For now, we need to be nimble entrepreneurs. We need to take this bad situation and create opportunities and positive change. Whether you build a
This unique publication is
more efficient short-sale business, a REO business focused on selling to first-
published by the Asian Real Estate
time homebuyers, coaching prospective Asian American homebuyers about
Association of America (AREAA)
all aspects of home buying or helping existing immigrant homeowners stay in their homes. There are many creative leaders making lasting improvements in this market today. The point is this: uncertainty and change creates opportunities for us. So, don't shy away from the real estate business because of the turmoil. However, this time, we need to focus on improving how our business gets done and we must make sure that our clients (homeowners) are the beneficiaries of our business.
Jim Park Editor-in-Chief A|R|E Magazine
for both its members and readers interested in this emerging marketplace. To receive an A|R|E Media Kit and for information about Editorial and Advertising opportunities Please contact Scott Hoover at 623-680-5174 or email scott@banatcommunications.com A Special Bimonthly Publication from the Asian Real Estate Association of America
EXCELLENCE
ALLEN CHIANG TAKES OVER THE REINS AND LOOKS TO PUSH AREAA TO THE NEXT LEVEL
T
llen Chiang is a perfectionist. He
In 1979, he migrated to the United States
readily admits to wanting to be the
and settled in California. Here he continued
best at anything and everything he
his education and later was offered a job as
does and will except nothing less than 110
computer engineer; however, he never gave
percent. He takes over the reins as 2009 Chair
up his goal to be a successful businessman,
of AREAA during turbulent times and is poised
and in 1987 he decided to change his profes-
to push the organization past its boundaries
sion to pursue a career in real estate.
and grow AREAA both locally and nationally.
In March of 1991, Chiang opened his own real estate company — Presidential Real
Nothing But The Best
Estate. He is now the CEO/Broker of six
Born in China, Chiang moved with his family
offices located in Cerritos, Rowland Heights,
to Taiwan when he was just two years old.
Hacienda Heights, Irvine, Chino and Los
There he grew up and graduated with a
Angeles. Within 10 months in 2000, he had
Judicial Degree. The pursuit of earning a bet-
broken the real estate association’s record by
ter living drew Chiang to start his own busi-
completing all the necessary courses and
ness.
earning six designations: CCIM, CIPS, CRB,
In 1974, he created his own import/export
ABR, SRES and ABRM.
company. Like most first-time business own-
“I strive to be the best at what I do —
ers, he struggled at first; however in less than
whether it be as an engineer or a real estate
one year; he expanded his business and built
agent — I have an inner drive that doesn’t
the largest factory in Taiwan, manufacturing
allow me to ever give up,” says Chiang. “It is
luggage and handbags that were exported to
this type of drive that I feel will allow us to
22 countries mainly, the United States, Can-
grow AREAA over the next year and into the
ada, Germany, and Australia.
future.”
JANUARY / FEBRUARY 2009
a|r|e
5
EXCELLENCE
Chiang, who was one of the founding
“I see the market today as a golden oppor-
board members of AREAA, says he was a little
tunity,” he says. “The market was overpriced
hesitant when he was first approached about
and it is adjusting; however, Asian Americans
being on the organization’s board.
have not seen as many problems as other
“I was and still am very busy with a num-
areas and groups, mainly because of their cul-
ber of organizations and volunteer work,” he
ture. Now is the perfect time for first-time
says. “However, the chance to promote Asian
homebuyers and those who are looking for
American real estate and its customers was
good investments, to get involved in real
just too good to pass up.”
estate. The market has never been more affordable than it is right now.” Chiang adds that with the buying power
Chiang has been proactively involved in numerous real estate activities over the
of the Asian American community and their
years. His accomplishments include:
traditional backgrounds, now is the time that
Elected President of Rancho Southeast Association of Realtors in 2001.
AREAA can really come to the forefront as a leader.
Elected State Director of C.A.R. serving different capacities in leadership roles within
“Over the next year, my goal with AREAA is
the Executive Committee, Nominating Committee, Regional Chair, Vice Chair of the
to educate our consumers to the different pro-
Membership Committee, Chair of International Real Estate Forum, Vice Chair of Land
grams that are available that can help them be
Use and Environmental Committee and other special Task Forces.
homeowners,” he says. “FHA is a great exam-
Elected as the N.A.R. Director, serving as Vice Chair from 2006-2009, and as Chair of the Equal Opportunity-Cultural Diversity Forum.
Awarded Realtor of the Year in 1996.
ple. It is a program that is growing and is perfect for our clientele. We need to educate our real estate professionals and help them educate their customers about the programs that
Awarded the President’s Realtor Award in 2000.
are available.”
Awarded the 2005 Distinguish Award from various local associations.
tinue to grow by increasing its visibility
Chiang also is looking to help AREAA connationwide. “We are hoping to add 10 to 12 chapters and significantly add to our membership
6
a|r|e
“I also founded the Los Cerritos Asian-
numbers,” he says. “We want to offer value-
American Real Estate Professional Club, was
added benefits to our members and continue
the So Cal MLS President in 2004, and in the
to partner with our affiliates to offer education
same year, was appointed the Department of
to our members.
Real Estate Commissioner Special Advisor,” he
“I want AREAA members to feel free to
says. “Finally, in 2005 I received the Real Estate
come to leadership with ideas,” he said.
H.O.P.E. Award Best Brokerage category from
“Communication is the key to growing our
N.A.R.”
organization and making it stronger. We need
Even with the market volatility that is
your help and your ideas and by working
occurring today, Chiang says AREAA is poised
together, AREAA not only will strive to be the
for growth.
best — it will be the best.”
JANUARY / FEBRUARY 2009
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ECONOMIST OUTLOOK
A Truly Global Economy What to look for in 2009 and beyond BY SCOTT HOOVER EDITOR, BANAT COMMUNICATIONS
or years, economists have been putting pen to paper trying to predict what the future holds. Will the stock market be bull or bear? Are housing costs on the rise or decline? Is there going to be inflation or stagflation? These are just a few of the questions economists have been known to write about. To put it in perspective, never in modern memory have Americans been so gloomy about their future. A record 90 percent of registered voters say the country is seriously off on the wrong track, according to the most recent ABC News poll. So what is next for the economy as it moves into 2009 not only in the United States, but also for the markets in Asia? With new President-elect Barack Obama saying the economy is No. 1 on his agenda, what are we to expect from the New Year? A/R/E talked to a number of economists about the overall real estate market in the United States, as well as the overall economic outlook for 2009.
F
JANUARY / FEBRUARY 2009
a|r|e
9
ECONOMIST OUTLOOK
National Existing Home Sales
Year 2005 2006 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 2008 2008 2008
Existing Single Family Condo/CoHome Sales Sales op Sales 7,076,000 6,180,000 896,000 6,478,000 5,677,000 801,000 5,652,000 4,939,000 713,000 Seasonally Adjusted Annual Rate Aug 5,500,000 4,810,000 691,000 Sept 5,110,000 4,450,000 664,000 Oct 5,060,000 4,430,000 625,000 Nov 5,020,000 4,410,000 611,000 Dec 4,910,000 4,320,000 588,000 Jan 4,890,000 4,350,000 540,000 Feb 5,030,000 4,470,000 560,000 Mar 4,940,000 4,360,000 580,000 Apr 4,890,000 4,340,000 550,000 May 4,990,000 4,410,000 580,000 Jun 4,850,000 4,260,000 590,000 Jul r 5,020,000 4,410,000 610,000 Aug p 4,910,000 4,350,000 560,000 vs. last month: -2.2% -1.4% -8.2% vs. last year: -10.7% -9.6% -19.0% year-to-date:
Existing Single Family Condo/CoHome Sales Sales op Sales * * * * * * * * * Not Seasonally Adjusted 575,000 501,000 74,000 410,000 356,000 54,000 421,000 371,000 50,000 388,000 342,000 46,000 360,000 316,000 44,000 278,000 250,000 28,000 312,000 277,000 35,000 375,000 331,000 44,000 434,000 386,000 48,000 483,000 425,000 58,000 504,000 445,000 59,000 504,000 436,000 68,000 489,000 431,000 58,000 -3.0% -1.1% -14.7% -15.0% -14.0% -21.6% 3.379 2.981 0.398
National Mos. Supply 4.5 6.5 8.9
Single Family Mos. Supply 4.4 6.4 8.7
Condo/Coop Mos. Supply 4.7 7.8 10.7
9.6 10.3 10.5 10.1 9.7 10.2 9.6 10.0 11.2 10.8 11.1 10.9 10.4 -4.6% 8.3%
9.3 10.0 10.2 9.8 9.4 10.0 9.2 9.6 10.7 10.5 11.0 10.4 10.0 -3.8% 7.5%
11.3 12.1 12.5 12.3 11.9 11.8 12.6 12.8 14.2 14.1 12.1 15.3 14.0 -8.5% 23.9%
National Sales Price of Existing Homes Year 2005 2006 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 2008 2008 2008
Existing Single Family Condo/Co-op Existing Single Condo/CoHome Price Price Price Home Price Family op Price Median Average (Mean) $219,600 $219,000 $223,900 $266,600 $267,400 $260,800 221,900 221,900 221,900 268,200 269,500 259,300 219,000 217,900 226,300 266,000 266,200 264,300 Not Seasonally Adjusted Not Seasonally Adjusted Aug r 224,400 223,700 229,200 269,300 269,700 266,300 Sept 210,500 208,600 222,000 257,300 256,300 262,100 Oct 206,700 204,800 221,800 255,100 253,600 260,300 Nov 208,800 207,300 219,300 255,700 255,500 257,000 Dec 207,000 205,000 222,000 254,000 253,000 262,200 Jan 199,700 197,200 219,600 245,500 243,900 258,700 Feb 195,600 193,600 211,800 242,000 240,700 252,100 Mar 200,100 197,600 218,500 247,100 245,400 259,600 Apr 201,200 199,600 213,400 247,200 246,200 255,000 May 207,900 206,000 222,500 252,600 251,200 263,400 Jun 215,100 213,600 225,900 257,900 256,800 265,500 Jul r 210,300 208,900 220,500 253,300 252,400 259,700 Aug p 203,100 201,900 212,600 245,400 244,700 251,200 vs. last year: -9.5% -9.7% -7.2% -8.9% -9.3% -5.7% Š2008 National Association of REALTORSŽ
early 2009 followed by recovery in the second half of 2009. This is what each of the economists A/R/E interviewed had to say about the economic outlook for 2009: A/R/E: What does the consolidation in the marketplace mean to the economy for 2009? National Association of Realtors: We are approaching or are in a recession, but we see recovery toward the later part of next year. The current financial panic is coming under control fairly quickly, but will probably cause the first half of 2009 to be weaker than expected. Overall the economy is slowing, but there is no particular reason to expect a deep recession. Consolidation of banks will probably result in a stronger financial system, but also one which puts increased scrutiny on credit standards. It is harder to get credit now than previously, and this will probably continue, given that billions of dollars have been lost. Dr. Tucker Adams (President of The Adams Group Inc., an economic consulting firm spe-
The United States, and the world for that matter, are in uncharted territory.
10
a|r|e
Predicting Is Unpredictable
cializing in national economics.): The consoli-
If there is one constant to what economists
dation in the financial services industry means
told us, it was that the United States, and the
many high paying jobs will disappear. The new
world for that matter, are in uncharted territo-
MBA who expected to go to work on Wall Street
ry. Never before have so many experts been so
with a big starting salary will be competing with
unsure of what may happen. What many
experienced people who lost their job for less
experts agree is a slowdown and recession in
prestigious positions paying much lower salaries.
JANUARY / FEBRUARY 2009
AECONOMIST R E ~ EDITOROUTLOOK ’ S NOTE
A/R/E: With the bailout now in place, what
and begun to decline in some parts of the
effect will it have on the economy for 2009?
country. This is a necessary condition for home prices to stop falling. However, as tens
NAR: As the Fed and Treasury provide substan-
of billions of dollars of Alt-A mortgages read-
tial additional liquidity to the markets one
just, with monthly payments increasing as
would expect the current financial panic to end.
much as 60 percent, foreclosures will continue
It is possible that we may have a few months of market concern, but the history of financial disruptions indicates that they end relatively quickly. Accordingly, modest recession for late 2008, early 2009, followed by recovery. U.S. Economic Outlook: September 2008
A/R/E: As far as the housing sector goes, what is in store for 2009? Is there a rebound, stabilization ready to take place or will the market continue downward?
2007
2007
2008
2008
2008
2008
2009
2009
2009
2009
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2006
Annual
Real GDP
4.8
-0.2
0.9
3.3
1.8
0.8
2.5
1.9
2.3
1.6
2.8
2.0
2.0
Nonfarm Payroll Employment
0.8
0.8
-0.3
-0.6
-0.3
0.4
1.0
1.2
2.4
1.7
1.8
1.1
-0.1
1.0
Consumer Prices
2.8
5.0
4.3
5.0
1.1
0.9
0.8
1.8
2.8
1.4
3.2
2.9
3.8
1.6
Real Disposable Income
3.1
0.6
-0.7
11.4
-3.9
-0.2
4.4
2.6
2.1
2.2
3.5
2.8
1.8
2.1
Consumer Confidence
106
91
77
57
55
57
64
70
74
75
106
103
62
71
4.7
4.8
4.9
5.3
6.0
6.2
6.2
6.0
5.9
5.8
4.6
4.6
5.5
5.8
2007
2008
2009
U.S. Economy Annual Growth Rate 2.0
Percent Unemployment
NAR: For approximately eight months the market has been hovering in the neighborhood of five million total sales per year, sometimes up a little, sometimes down a little. We expect sales to increase in the forthcoming
Interest Rates, Percent Fed Funds Rate
5.1
4.5
3.2
2.1
2.0
2.0
2.3
3.0
3.5
3.5
5.0
5.0
2.3
3.1
3-Month T-Bill Rate
4.3
3.4
2.0
1.6
1.9
2.0
2.2
3.0
3.5
3.6
4.7
4.4
1.9
3.3
Prime Rate
8.2
7.5
6.2
5.1
5.0
5.0
5.3
6.0
6.5
6.5
8.0
8.1
5.3
6.1
Corporate Aaa Bond Yield
5.8
5.5
5.5
5.6
5.8
5.9
6.1
6.1
6.0
6.0
5.6
5.6
5.7
6.0
10-Year Government Bond
4.7
4.3
3.7
3.9
3.9
4.1
4.3
4.5
4.5
4.5
4.8
4.6
4.0
4.5
30-Year Government Bond
4.9
4.6
4.4
4.6
4.5
4.6
4.9
5.0
5.0
5.0
4.9
4.8
4.5
4.9
Mortgage Rates, percent 30-Year Fixed Rate
6.6
6.2
5.9
6.1
6.5
6.6
6.7
6.7
6.7
6.7
6.4
6.3
6.3
6.7
year, possibly in the second and third quarters
1-Year Adjustable
5.7
5.6
5.1
5.2
5.2
5.3
5.5
5.6
5.7
5.8
5.5
5.5
5.2
5.7
given current financial uncertainties.
Housing Indicators 5,457
4,997
4,953
4,910
4,982
5,192
5,349
5,514
5,266
5,285
6,478
465
As far as prices, as we all know, prices have been declining. We expect prices to sta-
Thousands Existing Home Sales*
5652
5010
5,354
731
651
561
478
1,051
775
508
463
1,298
1,151
1,053
1,023
923
863
807
785
795
815
1,801
1,355
966
801
Single-Family Units
986
826
728
674
593
545
499
489
502
520
1,465
1,046
635
New Single-Family Sales Housing Starts
520
495
469
454
452
503
bilize this year and start to recover next year,
Multifamily Units
311
325
325
349
330
318
308
296
293
295
336
298
445
412
383
367
363
351
337
330
325
328
553
309 454
331
Residential Construction**
366
330
possibly toward mid-year given the current
Percent Change -- Year Ago -13.8
-20.7
-22.2
-16.4
-8.5
-12.8
-11.4
financial situation. See corresponding data
Existing Home Sales New Single-Family Sales
-27.3
-33.6
-33.1
-39.0
-32.3
-28.0
-19.1
-13.1
-6.0
2.1
-18.1
-26.3
-34.4
-8.9
Housing Starts
-23.8
-26.7
-27.5
-29.9
-28.9
-25.0
-23.4
-23.3
-13.9
-5.6
-12.9
-24.8
-28.7
-17.1
tables (left, right, and page 9).
Single-Family Units
-29.1
-33.9
-37.4
-41.9
-39.9
-34.0
-28.6
Dr. Adams: The only good news in the housing market is that inventories have stabilized
-8.7
3.9
8.0
12.3
5.7
1.8
6.9
-31.4
-27.5
-15.3
-4.6
-14.6
-39.3
-20.9
Multifamily Units
-0.1
1.7
12.2
16.2
6.0
-2.2
-5.3
-15.2
-11.2
-7.2
-4.5
-8.0
7.0
-9.9
Residential Construction
-17.0
-19.0
-21.3
-22.2
-18.5
-14.7
-12.0
-10.1
-10.5
-6.6
-4.6
-17.9
-19.4
-9.8
Median Home Prices Thousands of Dollars Existing Home Prices
221.2
207.5
198.5
208.1
205.5
200.7
199.1
211.8
212.1
208.3
221.9
218.9
203.6
208.5
New Home Prices
241.0
237.0
235.7
235.4
232.6
237.0
237.1
240.3
242.3
250.5
246.5
247.2
235.1
242.8
Percent Change -- Year Ago Existing Home Prices
-1.7
-5.4
-7.2
-7.1
-7.1
-3.3
0.3
1.8
3.2
3.8
1.0
-1.4
-7.0
2.4
New Home Prices
2.0
-3.3
-7.9
-2.3
-3.5
0.0
0.6
2.1
4.2
5.7
2.3
0.3
-4.9
3.3
Housing Affordability Index
109
121
132
125
120
123
123
117
118
121
106
112
125
117
Quarterly figures are seasonally adjusted annual rates. * Existing home sales of single-family homes and condo/coops; ** billion dollars
JANUARY / FEBRUARY 2009
a|r|e
11
ECONOMIST OUTLOOK
to rise. This puts downward pressure on home
A/R/E: What is the overall outlook for the
prices. Coupled with the difficulty of obtaining
economy as we move toward 2009?
mortgage financing, 2009 will be a challenging year for the real estate industry. I believe
NAR: Our overall forecast is slowdown and
we are at least two years away from a rebound
recession, followed by recovery in the second
in new home construction.
half of 2009. We expect housing sales and prices to be up modestly. Dr. Adams: 2009 will be a difficult year for the U.S. economy. Even if financial markets return to more normal configurations after the mas-
Existing Single Family Home Sales Year 2005 2006 2007
U.S. 6,180,000 5,677,000 4,939,000
2007 Aug 2007 Sept 2007 Oct 2007 Nov 2007 Dec 2008 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul r 2008 Aug p vs. last month: vs. last year: year-to-date:
4,810,000 4,450,000 4,430,000 4,410,000 4,320,000 4,350,000 4,470,000 4,360,000 4,340,000 4,410,000 4,260,000 4,410,000 4,350,000 -1.4% -9.6%
Northeast Midwest South 838,000 1,411,000 2,457,000 787,000 1,314,000 2,352,000 723,000 1,181,000 2,053,000 Seasonally Adjusted Annual Rate 720,000 1,160,000 2,010,000 650,000 1,080,000 1,890,000 670,000 1,080,000 1,880,000 650,000 1,060,000 1,840,000 610,000 1,040,000 1,810,000 580,000 1,100,000 1,820,000 660,000 1,120,000 1,840,000 680,000 1,050,000 1,770,000 630,000 1,000,000 1,790,000 660,000 1,050,000 1,760,000 610,000 1,000,000 1,700,000 660,000 1,020,000 1,690,000 620,000 1,030,000 1,720,000 -6.1% 1.0% 1.8% -13.9% -11.2% -14.4%
West 1,474,000 1,224,000 982,000
U.S. * * *
920,000 830,000 800,000 860,000 860,000 850,000 850,000 860,000 920,000 940,000 950,000 1,040,000 980,000 -5.8% 6.5%
501,000 356,000 371,000 342,000 316,000 250,000 277,000 331,000 386,000 425,000 445,000 436,000 431,000 -1.1% -14.0% 2.981
sive intervention by the Treasury and Federal
Northeast Midwest South * * * * * * * * * Not Seasonally Adjusted 76,000 119,000 212,000 52,000 89,000 152,000 56,000 87,000 161,000 49,000 77,000 145,000 43,000 75,000 138,000 35,000 56,000 107,000 43,000 70,000 114,000 50,000 81,000 134,000 55,000 91,000 155,000 57,000 106,000 166,000 67,000 106,000 173,000 69,000 104,000 165,000 63,000 100,000 172,000 -8.7% -3.8% 4.2% -17.1% -16.0% -18.9% 0.439 0.714 1.186
West * * *
Inventory 2,390,000 2,920,000 3,390,000
Mos. Supply 4.4 6.4 8.7
94,000 63,000 67,000 71,000 60,000 52,000 50,000 66,000 85,000 96,000 99,000 98,000 96,000 -2.0% 2.1% 0.642
3,730,000 3,700,000 3,780,000 3,590,000 3,390,000 3,630,000 3,430,000 3,500,000 3,900,000 3,800,000 3,900,000 3,800,000 3,600,000 -5.3% -3.5%
9.3 10.0 10.2 9.8 9.4 10.0 9.2 9.6 10.7 10.5 11.0 10.4 10.0 -3.8% 7.5%
U.S.
2005 2006 2007
$219,000 221,900 217,900
2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 2008 2008 2008
Aug r Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul r Aug p vs. last year:
223,700 208,600 204,800 207,300 205,000 197,200 193,600 197,600 199,600 206,000 213,600 208,900 201,900 -9.7%
Northeast
Midwest South Median $281,600 $168,300 $181,100 280,300 164,800 183,700 288,100 161,400 178,800 Not Seasonally Adjusted 288,000 174,700 183,300 267,300 161,800 173,600 261,200 156,800 169,900 263,500 156,400 172,300 258,600 154,900 171,300 274,900 144,300 162,900 274,000 137,000 163,000 291,000 145,100 167,300 266,300 153,400 170,000 284,600 158,900 174,700 266,100 169,800 186,100 280,000 165,100 177,400 274,400 164,800 177,600 -4.7% -5.7% -3.1%
West
U.S.
$340,300 350,500 342,500
$267,400 269,500 266,200
339,100 318,500 322,900 333,000 318,000 301,400 296,600 290,600 290,600 290,200 288,400 286,900 254,900 -24.8%
269,700 256,300 253,600 255,500 253,000 243,900 240,700 245,400 246,200 251,200 256,800 252,400 244,700 -9.3%
Northeast Midwest South Average (Mean) $306,000 $201,000 $231,800 306,000 202,600 230,800 313,300 196,100 225,900 Not Seasonally Adj usted 314,700 206,100 229,800 298,800 193,700 217,400 295,100 188,900 213,500 294,100 186,400 217,100 293,100 187,800 216,100 302,400 173,000 205,400 298,900 168,000 204,300 313,100 176,200 209,400 297,700 182,900 213,100 313,800 184,500 218,900 300,400 197,200 231,200 308,400 192,800 221,900 304,500 191,200 221,800 -3.2% -7.2% -3.5%
side of the economy that must be worked out. Consumers are deeply in debt — credit cards, equity lines, and mortgages. Since 1992, consumer spending has grown an average of 2.5 percent a year after adjustment for inflation, through a recession and two years of declining employment. Spending was maintained by reducing saving out of income to
Sales Price of Existing Single-Family Homes Year
Reserve, there are many problems on the real
West $368,800 378,100 372,500 370,900 355,600 358,000 364,200 354,200 340,800 337,200 330,900 331,600 330,900 331,400 326,700 298,100 -19.6%
©2008 National Association of REALTORS®
zero, taking equity out of homes and running up credit card debt. The average household has 12 credit cards and only 37 percent pay their entire balance each month. 2009 will be a year of reduced consumer spending, paying off debt, increasing saving and learning to live within our income. Banks will be slow to loan to anyone without the highest credit rating. Financial institutions lend too long into a bubble and are hesitant to begin lending into an expansion. This means it will be difficult to finance homes, automobiles and major appliances.
12
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JANUARY / FEBRUARY 2009
ECONOMIST OUTLOOK
Existing Home Sales U.S. 7,076,000 6,478,000 5,652,000
Year 2005 2006 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 2008 2008 2008
Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul r Aug p
5,500,000 5,110,000 5,060,000 5,020,000 4,910,000 4,890,000 5,030,000 4,940,000 4,890,000 4,990,000 4,850,000 5,020,000 4,910,000 -2.2% vs. last year: -10.7% year-to-date:
Northeast Midwest South 1,169,000 1,588,000 2,702,000 1,086,000 1,483,000 2,563,000 1,006,000 1,327,000 2,235,000 Seasonally Adjusted Annual Rate 1,000,000 1,300,000 2,190,000 910,000 1,220,000 2,060,000 920,000 1,210,000 2,050,000 890,000 1,190,000 1,990,000 840,000 1,160,000 1,960,000 800,000 1,210,000 1,950,000 890,000 1,240,000 1,990,000 910,000 1,170,000 1,920,000 870,000 1,100,000 1,920,000 910,000 1,160,000 1,910,000 850,000 1,110,000 1,860,000 910,000 1,130,000 1,850,000 850,000 1,140,000 1,860,000 -6.6% 0.9% 0.5% -15.0% -12.3% -15.1%
West 1,617,000 1,346,000 1,084,000
U.S. * * *
1,020,000 930,000 880,000 950,000 950,000 930,000 920,000 940,000 1,000,000 1,020,000 1,030,000 1,130,000 1,070,000 -5.3% 4.9%
575,000 410,000 421,000 388,000 360,000 278,000 312,000 375,000 434,000 483,000 504,000 504,000 489,000 -3.0% -15.0% 3.379
Northeast Midwest South * * * * * * * * * Not Seasonally Adjusted 107,000 135,000 228,000 74,000 101,000 165,000 76,000 97,000 174,000 67,000 87,000 156,000 61,000 83,000 150,000 45,000 62,000 115,000 56,000 76,000 125,000 65,000 90,000 147,000 74,000 100,000 168,000 82,000 117,000 180,000 91,000 118,000 188,000 101,000 117,000 180,000 87,000 111,000 185,000 -13.9% -5.1% 2.8% -18.7% -17.8% -18.9% 0.601 0.791 1.288
West * * *
Inventory 2,846,000 3,450,000 3,974,000
Mos. Supply 4.5 6.5 8.9
105,000 70,000 74,000 78,000 66,000 56,000 55,000 73,000 92,000 104,000 107,000 106,000 106,000 0.0% 1.0% 0.699
4,383,000 4,370,000 4,433,000 4,217,000 3,974,000 4,160,000 4,018,000 4,118,000 4,549,000 4,482,000 4,495,000 4,575,000 4,255,000 -7.0% -2.9%
9.6 10.3 10.5 10.1 9.7 10.2 9.6 10.0 11.2 10.8 11.1 10.9 10.4 -4.6% 8.3%
Sales Price of Existing Homes Year
U.S.
2005 2006 2007
$219,600 221,900 219,000
2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 2008 2008 2008
Aug r Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul r Aug p vs. last year:
224,400 210,500 206,700 208,800 207,000 199,700 195,600 200,100 201,200 207,900 215,100 210,300 203,100 -9.5%
Northeast
Midwest South Median $271,300 $170,600 $181,700 271,900 167,800 183,700 279,100 165,100 179,300 Not Seasonally Adjusted 281,800 177,900 182,800 260,900 165,600 174,300 257,500 160,200 171,000 257,900 160,300 172,900 254,900 159,000 172,300 268,500 148,500 164,000 264,500 142,800 163,300 283,600 150,900 167,700 261,300 157,700 170,000 278,300 162,900 174,900 264,900 172,700 185,700 278,300 167,700 176,900 271,000 168,000 176,500 -3.8% -5.6% -3.4%
West
U.S.
$335,300 342,700 335,000
$266,600 268,200 266,000
330,600 311,000 316,900 325,400 311,100 296,200 292,400 284,800 285,700 286,000 285,700 282,000 251,600 -23.9%
269,300 257,300 255,100 255,700 254,000 245,500 242,000 247,100 247,200 252,600 257,900 253,300 245,400 -8.9%
Northeast Midwest South Average (Mean) $297,000 $203,800 $231,700 299,700 205,300 230,000 307,100 200,500 225,600 Not Seasonally Adjusted 309,500 210,400 228,200 293,900 198,700 217,700 291,600 197,000 214,500 289,800 191,900 217,400 291,100 193,400 216,700 298,400 178,800 206,500 292,700 175,100 204,600 310,800 183,200 209,600 294,400 188,500 212,900 309,100 190,700 219,000 298,700 201,900 230,500 307,100 196,900 221,100 300,600 196,400 220,400 -2.9% -6.7% -3.4%
West $363,800 371,300 365,900 363,100 348,700 354,200 357,200 347,700 335,600 333,100 325,200 327,000 326,700 328,500 322,400 294,500 -18.9%
Jobs will continue to decline and unemploy-
nesses look first to expand current workers'
ment will rise. Although most of us will keep
hours and only after several months of growth
our jobs — even with a 10 percent unemploy-
feel secure enough to add to payrolls.
ment rate, 90 percent of us are employed — a sense of unease will pervade consumer confi-
The economy won't grow for about a year.
dence, making even those who can afford to
While measures taken by the Federal Reserve
spend more cautious.
and Treasury Department and by central bankers abroad will avoid another Great
Gross domestic product will shrink through at
Depression, all the king's horses and all the
least the first half of 2009. In the second half, a
king's men can't reverse the business cycle.
weak recovery is the best to be hoped for. For
Recessions must run their courses.
the year, growth isn't likely to be much better
But take heart.
than flat. We expect unemployment to climb to
The editors of Kiplinger's Personal Finance
7.5 percent or so next year and slightly higher
came up with 10 things going right these days.
in 2010: Joblessness typically continues to rise
Take a look at the next page and see if you
even after economic growth resumes, as busi-
agree:
JANUARY / FEBRUARY 2009
a|r|e
13
ECONOMIST OUTLOOK
Ten Things That What to look forward to in 2009
1
Oil Loses Its Swagger:
truck, the discounting on some
news for first-time homebuyers
With the U.S. and global
models is extraordinary.
who were priced out of the
economy hurting, oil prices have dropped 50 percent in just three
market. While scare stories perInterest Rates Are Low
sist of credit drying up, the real-
months, from $147 a barrel in
3
and Headed Lower: The
ity is more a return to tradition-
July to the $60 range. Remem-
prime rate is at 4.5 percent (as of
al lending standards that had
ber $80-$100 fill-ups at the
this writing), which is driving
been thrown overboard —
pump? The national average for
down interest rates on home
recklessly in many cases — by
a gallon of gasoline is down
equity lines of credit and some
lenders. That means to qualify
below $2.50, from $4.11 in
consumer loans. The interest rate
you usually need a 20 percent
March, and should stay in that
on a traditional 30-year fixed-
down payment, sufficient an-
range through next year. Prices
rate mortgage is averaging 6.5
nual income, good credit and a
for home heating oil and natural
percent, the highest it's been
tolerable load of debt.
gas are also headed lower this
since the summer of '07, but still
winter than last.
not too far from the historic low
2
of 5.8 percent reached in 2003-
5
A Tipping Point for the
05 and 1963-65. And although
$700-billion federal rescue plan
Never Been Safer: The
Auto Industry: After years
credit card companies are cut-
more than doubles the amount
of talk and false starts, finally, all
ting personal spending limits,
of federal deposit insurance on
the major carmakers are furious-
rates are dropping, too. The aver-
individual bank accounts, to
ly developing hybrid and alter-
age rate on credit card purchases
$250,000 from $100,000. Uncle
native-fuel vehicles that could
fell to 11.89 percent in the first
Sam sweetened the pot furth-
lessen our dependence on for-
week of October, down from
er on October 14 by providing
eign oil. Meanwhile, desperate
12.13 percent in September, ac-
unlimited FDIC insurance on
dealers are offering unheard of
cording to LowCards.com, which
non-interest-bearing accounts.
incentives on new, gas-fired
tracks 1,260 credit cards.
That will provide more cover-
models. For example, Toyota is offering $1,000 cash back and 0
14
Your Bank Savings Have
age for the nation's small busiHomes Are More Afford-
nesses,
which
use
these
percent financing on the 2009
4
able: Real estate, which
accounts. Plus, a new tempo-
Camry, the most popular car in
was overpriced during the
rary federal insurance program
America. Don't drive much? If
housing bubble, has returned
covers the full value if your
you've always wanted an SUV or
to earth. That's especially good
money-market-fund shares fall
a|r|e
JANUARY / FEBRUARY 2009
ECONOMIST OUTLOOK
Are Going Right below a net asset value of $1
The Miracle of Technolo-
accounts for a measly 9 percent
gical Innovation Contin-
of their assets — providing all
The program provides cover-
ues: Been to Best Buy, Sam's or
the credit they'll need for 2009
age for shareholders for the
Costco lately? For $799, you can
operations. At home, while food
amount they owned on Sept.
now buy a 42-inch, high-defini-
prices jumped sharply earlier
19, 2008.
tion flat-panel TV that will knock
this year, the weak economy is
your socks off. Throw in another
now expected to slow further
Stocks Are on Sale, and
$200, and you can get a sur-
price increases.
(called ‘breaking the buck’).
7
6
Many Bonds Offer Terrific
round-sound system to truly
Yields: The current bear market
transform your den into a home
is approaching the 1973-74 and
theater. A top-of-the-line PC
9
2000-2002 downturns, the two
with more memory than you'll
ack Obama is set to enter the
worst retreats since World War II.
ever use now costs $1,000; high-
White House in January. The
That's the bad news. The good
end laptops with all the bells and
election of a new chief executive
news: Individual blue chips are
whistles go for $1,200, down
should provide at least 100 days
selling at bargain prices. For
from $2,000-$4,000 five years
of galvanizing certainty for mar-
example, shares of AT&T™ sell for
ago. And giant leaps in handheld
kets, and a new direction and
about eight times estimated
devices, such as Apple's new
sense of purpose for the country.
2009 earnings and yield 6%.
iPhone, have revolutionized the
Networking giant Cisco Systems
way people interact with the
(CSCO) sells for only ten times
world.
tion in Washington: Bar-
10
Holiday shoppers Received Great Gift Buys
This Season: Retailers depend
earnings estimates for its July 2009 fiscal year. Johnson &
A New Tone and Direc-
Prosperity Reigns in the
on robust end-of-year sales to
Johnson (JNJ), as steady an
8
Heartland: The fall harvest
turn a profit, but for 2008, the
Eddie as you'll find, sells for just
is shaping up as one of the best
National Federation of Retailers
13 times '09 forecasts, and
ever, despite the destructive
forecasted holiday spending to
Google (GOOG) is going for less
weather and floods in the
increase only 2.2 percent from
than 15 times estimates. Triple-
Mississippi River corridor since
last year. With final numbers
A-rated tax-free bonds, an
last spring. Exports of U.S. farm
not yet in as of press time, bar-
extraordinarily safe investment,
products will increase more than
gain hunters found deals in just
are paying 5 percent-plus for 10
40 percent by value this year.
about every aisle though. Both
years and 6 percent for 20. That's
And recent years of high profits
brick-and-mortar and online
more than the Treasury offers for
have allowed farmers to pay
retailers offered huge discounts
bonds of the same maturity.
down debt so low that it
to boost sales.
JANUARY / FEBRUARY 2009
are
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15
DEVELOPMENT SPOTLIGHT
I
mproving residential conditions is one of the
ers have even agreed to make up the price difference, if
most prominent aspects of the Chinese gov-
their clients buy their houses at a higher price.
ernment’s efforts to improve quality of life in
The competition between developers is also get-
the 21st Century. It is this motivation to pro-
ting more severe. Over the past three to six months, the
mote the quality of residential conditions and
global financial crisis, and the sub-prime mortgage
create a better social atmosphere, that the
loan crisis have also affected the stock market and real
Chinese government is using to bring forth
estate market in China. A lot of investors are maintain-
change.
ing a conservative attitude toward an uncertain mar-
After 20 years of work, the lack of residential space
ket. Although some real estate developers have tried to
in China has been greatly reduced. While housing
sell their house at obvious discounts or through other
prices soared, the real estate market began booming in
sales promotion measures, as of late, the consumer has
Shanghai in 2004. Throughout 2007, the real estate
been slow to spend.
market in Shanghai seemed to be almost overheated.
The real estate industry has anxiously asked the
Today, a lot of real estate developers are eager to
government to step in, but the government has been
purchase land, therefore in many instances, land prices
slow to respond and as of this publication of this issue
are even more expensive than the house itself. This so-
of A/R/E, the real estate industry has not received a
called “flour is more expensive than bread” phenome-
reply. With the market facing its harshest credit crunch
non illustrates the market’s ever-growing confidence
in years, investors are staying cautiously optimistic in
and ambition.
Shanghai and trying to control risks.
However, some problems and risks have arisen
Under these circumstances, aside from a more
with the booming market. With a series of government-
appropriate market position and lower profit expecta-
curbing policy decisions for real estate development in
tions, the enhanced quality of life aspects on develop-
2007, investment has started slowing down. The con-
ments helped developers win over consumers and
flict between supply and consumption has become
maintain the market’s viability.
more obvious.
Residential quality of life in China not only refers to
More overseas capital is flowing into the Chinese
building construction quality, but also to the allure of
market, and housing prices are now entering a more
an enhanced lifestyle, which meets consumers’ expec-
stable phase as prices are leveling out. Some develop-
tations of more comfortable living environments.
16
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JANUARY / FEBRUARY 2009
Shanghai
China’s largest city, and the showpiece of the world’s fast growing economy, focuses on residential real estate that stresses multi-use, humanization, personalization, and nature and environment. BY RENZO ZHANG
DEVELOPMENT SPOTLIGHT
hanghai, that nations’ largest city and an
S
and aesthetic requirements of people. Only
international showpiece, has put devel-
through solid investigation and scientific infer-
opers on notice that enhanced quality of
ence, can this combination be successful.
life is the most important aspect of future resi-
Shanghai, known for its “Continental
dential development. In particular, four impor-
European style” in the 1980s, is beginning to
tant areas have to be addressed:
change. The old Continental European style mainly shows classic elevation but complicat-
Reasonable Multi-Use
ed details. Meanwhile, it also introduced the
Reasonable multi-use actually includes the fol-
concept of the big living room.
lowing several comprehensive diversified
Actually, this adoption of European style
designs:
was an immature attempt. In addition, it is not
1. Diversification for the multifunctional
the first evidence of a merging of European
residence. 2. The diversification of products to meet the
style and Chinese architecture. Shanghai Shikumen, an old-styled architecture (built in
requirements of customers from different
1920s-1930s), was another unique experiment
levels.
combining Chinese style and European style.
3. The diversified design methodology and material. 4. Diversified space layer.
Although the latest trial perhaps did not find a foundation, it has blended the architectural style in Shanghai, by diversifying western
Diversification for the Multifunctional Resi-
European concepts and even further develop-
dence. The concept of diversification for the
ing some styles such as North American,
multifunctional residence is a revision of the
English, Mediterranean, Northern European,
early modernist theory based on the conclu-
Middle European and Southern European. It
sion of traditional culture issued by the
also stimulated the rise of traditional Chinese
Western world in the 1990s.
style. Chinese style, especially the South Yangzi
The basic meaning goes against the dull
river style and the local Shanghai style, have
and unified methodology, which simply di-
been innovatively developed. We believe after
vides the land by its functions. Diversification
a certain time, a new residential Shanghai style,
for the multifunctional residence advocates
which incorporates the Chinese style and west-
the appropriate combination of economic
ern style will be formed.
ARCHITECTURE is a solid music. The aesthetics can be found through the details.
18
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JANUARY / FEBRUARY 2009
SPG Land the Hampton In a contemporary society with a highly-devel-
image (decided by the vast area but sparsely
oped social production system, this represents
populated situation in North America) of the
the trend of production development return-
housing and expensive land value.
ing to nature in order to reduce the impact on
The usage of natural stones and other
the environment. It also executes individual
plain and grand materials in traditional North
management in detail throughout each part of
American housing endows SPG villas with the
the production system in order to improve pro-
conceptual characteristics of nature returning
duction efficiency of each unit.
— peace in noise, forest in the city, etc. It pro-
Based on these developments, the Fortune
vides a comfortable environment — elegant
Global 500 have enhanced their effort on this
but private — with diversified landscape ele-
aspect as representatives of advanced produc-
ments.
tivity. The former SPG Land the Hampton was
“A true North American Manor Style” is a
simple and tended to be a more modern indus-
life style, a kind of “Display of Wealth,” in which
trialization style, which could not match its
a certain level of quality of life is expected and
marketing orientation.
enjoyed. Certainly, it is more a reflection of a
In the new front design, HZS, LLC took the traditional single villa in North America as the
stable quality of family life, a presentation of people’s elegance and individuality.
chief source and emphasized the quality and
Comfort, should be felt first by the resi-
characteristic of housing through the sharp
dence, and second by passengers. The trace of
contrast between the grand and extended
corner stone at the corner of the decorative
JANUARY / FEBRUARY 2009
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19
DEVELOPMENT SPOTLIGHT
In the new front design, we took the traditional single villa in North America as the chief source and emphasized the quality and characteristic of the housing through the sharp contrast between the grand and extended image of the housing and expensive land-value, which endow SPG villas with the conceptual characteristics of nature returning, peace in noise, forest in the city.
20
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belt stone under the cornice and frames of
aesthetics can be found through the details.
doors and windows of palace style add an
Although people usually appreciate the
uncommon, elegant and noble manner into
architecture from a macro aspect, it is the
the general frame of the plain and grand tradi-
humanity represented by the architecture that
tional North American Housing.
people can enjoy in real life. After achieving the
And the adoption of corner stones
basic living requirements, architecture should
strengthens the outline of the architecture and
let people enjoy spiritual things such as the
endows the sense of power and stability, which
diversified space layer, style and material.
matches the social status and personal charm
This is the basic meaning of the diversified
of CEOs of the Fortune Global 500. Additionally,
material, methodology and space layer. The
some transformed elliptical windows and
final target of the architecture and landscape
vaulted window lintels add a humanistic
design is to organize those diversified well
expression upon the strong background so as
enough to form a unified and harmonious
to give a warm sense to the housing.
entirety in which people appreciate its beauty.
The diversified design, which seeks a harmonious coexistence, aims to satisfy the basic
Exquisite Humanization
needs of people. The living environment is
When looking at exquisite humanization, the
spectacular and lively. The aesthetics of the art
architecture should represent the spirit of the
originates from this harmonious and change-
city and humanization idea. Architecture is
able nature. Architecture is a solid music. The
another way to express lifestyle and aesthetics.
JANUARY / FEBRUARY 2009
DEVELOPMENT SPOTLIGHT
An excellent design can represent a designers’
there’s enough area, the architect should organ-
The international residence actually advo-
profound observation and consideration for
ize every side and every angle of the residence
cates a more humanized, comfortable, cozier
the targeted users, especially those of the high-
— especially the interior of the house, taking
lifestyle. It respects the custom of people, the
profiled projects.
the basic needs of people into consideration.
rights for living and enjoyment. To be more
All projects should have a close connec-
As we all know, the unique and thoughtful
specific, the humanized service and design
tion with the environment, so the cultural
way for handling the details can reflect the
should be the highlight in the residential space.
essences of the project location are an impor-
value of architecture and the taste of the users.
Coziness, enjoyment, privacy and safety are the
tant inspiration for the design. An innovative
This almost becomes the golden rule for archi-
basic compositions. Although different proj-
and acceptable work can be produced by the
tecture. If the designer can try to highlight this
ects have different style, characteristics, “the
combination of a profound understanding of
point and keep it under budget and time, it can
most suitable one for living” is the common
the local culture, modern technology and
be spectacular.
requirement. The diversification for consump-
material.
The international residence includes a
tion can also motive the designer to create the
Exquisite humanization also can be shown
development concept, market position, infra-
“most suitable one for living” among the same
by the way designers deal with the details. If
structure, service and an advocated lifestyle.
type of product.
JANUARY / FEBRUARY 2009
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21
DEVELOPMENT SPOTLIGHT
New Jiangwan Town
Creating a new, popular, advanced, sustainable, pilot outdoor space, taking culture as our guideline.
22
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New Jiangwan Town #6 is located in Shanghai
lane,” “walkway greenery,” “open green area,”
Yangpu Wujiaochang, a prosperous sub-down-
and “relaxing clubhouse” which enhance the
town area in Shanghai. A community area is
pride that owners feel for their residence. HZS,
located to the south of The New Jiangwan
LLC tries to create a prosperous green commu-
Town community and provides cozy and ele-
nity. They have built up a large green area at
gant surroundings.
the center of the community to meet the
HZS, LLC aims to build a sporty, ecological
requirements of being close to nature.
residential environment following the “people
HZS, LLC also incorporates the new con-
first concept” with a reasonable layout, com-
cept with new materials, technology and resi-
prehensive function, convenient traffic flow
dential area to promote the residential func-
and large amounts of green areas. HZS, LLC
tion and quality while providing cozy, safe,
emphasizes the ecological environment and
sporty, scientific and advanced modern resi-
life quality and appropriate allocation of all
dential space.
infrastructure and utility resources.
The aim was to create a new, popular,
The starting point for HZS, LLC is the over-
advanced, sustainable, pilot outdoor space,
all improvement of residential quality and envi-
taking culture as the guideline. By making this
ronment and its architectural design highlights
breakthroughs in terms of architectural style,
the incorporation between residential environ-
technology, and materials we feel we are estab-
ment and architectural units, between the
lishing advanced, innovative architecture.
group and entirety, and the coordination
With the adoption of new high-tech living,
among the residence environment, architec-
the architecture has become the pilot among
ture and city development plan.
similar products. With this project, we have
There are a lot of lively humanized con-
taken the actual needs of its residents into full
structions such as “Courtyard space,” “green
consideration while respecting the habits and
JANUARY / FEBRUARY 2009
DEVELOPMENT SPOTLIGHT
JANUARY / FEBRUARY 2009
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23
DEVELOPMENT SPOTLIGHT
requirements of the metropolis resident to meet diversified requirements. Combing the delicate architectural details, elevation materials and line changes, shows the rich elevation, which forms a changeable architectural shape. The modern style is integrated with free, lively, innovative humanized elements, while allowing people to still feel its unique classic reminiscence sentiment. In terms of the elevation material, the modern style has been adopted to form a strong material contrast and a unique elevation effect, using the modern architectural language. The outside wall is composed of steel, glass, paint and partial metal decorative elements. With the texture of the metal and the contrast of the color, the elevation model reflects the unification of elegance, decency and modernity.
Various Individualization to Create a Personalized Lifestyle For consumers of different backgrounds and status levels, the design of elegant, detailed, beautiful and useful architectural units to meet the client’s taste and personal requirements are very important. The infinite charm of design is innovation. There is no doubt this kind of architecture would be the most valuable architecture in this era, because it undertakes human innovative courage and wisdom at the same time. The consistent pursuit of designers is to creatively personalize all design. While in practical activities, a designer can make his design unique and different from other projects through environment and structure.
24
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JANUARY / FEBRUARY 2009
DEVELOPMENT SPOTLIGHT
New Jiangwan Town #6 incorporates the new concept with new materials, technology and requirements for residential areas to create a modern residential space which is ahead of its time. A modern style has been adopted for elevation material to generate a unique effect while allowing different schemes to meet diversified requirements.
JANUARY / FEBRUARY 2009
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25
DEVELOPMENT SPOTLIGHT
CR Land Shanghai, The Bundside Phase 2
A rich vocabulary of important architectural and landscape architectural elements were featured within The Bundside’s landscape concept to create the Tropical Style ambience. Trekking trails have been incorporated throughout the neighborhood’s landscape affording exciting and rewarding alternatives to the typical residential living experience.
Drawing inspiration from the unique and cap-
design that includes a cosmic balance among
tivating Tropical Style Landscapes and the
man, nature and god within their landscape
concept of creating harmony amongst one’s
design for The Bundside. Its layout of ideal
surroundings, HZS USA embarked on their
order is simplistic, but does contain the essen-
Tropical Style themed landscape design
tial elements of complex and intricate detail-
approach for CR Land Shanghai The Bundside
ing.
development. HZS realized immediately this
A rich vocabulary of important architec-
high-end development had the potential of
tural and landscape architectural elements
not only being the top exclusive residential
were featured within The Bundside’s land-
development within China, but also an
scape concept to create the Tropical Style
intriguing and attractive international quality
ambience. This included intriguing garden
landscape.
areas, lawn verandahs, intimate garden patios,
Wanting to create a Tropical Style land-
multi-functional terraces, vine covered pergo-
scape of great natural beauty that harmo-
las, light and transparent pavilions, decorative
niously blended within the adjacent phase
landscape walls with pocket planting, strategi-
one landscape but with dramatically less hard-
cally placed sculptures, landscape passage-
scape, we knew the landscape had to be
ways and external staircases to access many
majestic, upscale and grand. It had to be a
level changes.
complete tropical experience and a unique
A seamless indoor/outdoor landscape
window to Tropical Style culture and land-
effect was achieved throughout the neighbor-
scape, but with an emphasis on tropical
hood as open space treatments and transi-
softscape. Also, the landscape had to be ele-
tional areas were maximized between indoor
gant with remarkable detail true to Tropical
and outdoor spaces.
Style and poetic in its expression.
Gateways announce entrances to a series
HZS, LLC did incorporate the organiza-
of interconnecting courtyards with open-air
tional essence of Tropical Style landscape
structures that take advantage of prevailing breezes and dramatic lake views. These intimate courtyards were designed to contribute to the ambience of the neighborhood by heightening the environment through creative design that affords physical, environmental, psychological and social benefits. The spectacular multi-terraced swimming pool with dramatic tension-edge treatment is the featured focal point of The Bundside’s landscape affording spectacular panoramic views. The adult pools, both active and passive, were strategically placed to take full advantage of the dramatic natural beauty of the proposed landscape while also creating an enchanting poolside party space.
26
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JANUARY / FEBRUARY 2009
DEVELOPMENT SPOTLIGHT
Within the terraced pool system is a spe-
Landscape design style. The Bundside’s land-
deserves attention. Currently, the people
cial toddler’s pool and an interactive pool that
scape is a true celebration of the mystical
only notice the flora, while ignoring the
children will love. A tropical island was also
Tropical Style as it has been uniquely
other two aspects of the biological chain
carefully designed within the pool featuring a
expressed and harmoniously blended with
(animal and microbe). Good microbes can
one-of-a-kind Jacuzzi complete with intricate-
the existing phase one landscape to feel like
promote growth of plants and attract birds,
ly detailed frog sculptures in playful poses and
one overall community landscape.
insects and fish, forming good biological
arrangements that guests will be captivated by.
Regardless of whether you own property
community through recirculation.
3. In
within The Bundside or are a guest, one will be
terms of ecology, environmental features
Water is a key element for cooling effects
captivated by the sensual qualities of the
tend to be natural and clean. The elements
and natural drama within The Bundside’s pro-
landscape’s intricate and artful detailing as
should avoid fussiness, exaggeration, over-
posed environment. Stunning water terraces,
well as the majestic and grand elements.
carved vision or sound pollution. Some
cascades, and waterfalls have been included
Creating a Natural Environment
throughout the proposed landscape, as well
that Meets the Requirements of
as playful water spouts, sprays and innovative
Ecology, Beauty and the Human
water effects for a true celebration of water.
Being Landscape environmental
The outdoor spa is connected to the
design in Shanghai’s residential
lower poolside party terrace via a dramatic
areas is developing in full consider-
water cascade. Innovative night-lighting
ation of ecology, beauty, as well as
effects have been designed within this feature
promoting a strong inner self.
to ensure this feature is spectacular both in
Marco ecology is caused by macro
the day and at night.
environment, which cannot be
The Bundside’s landscape is a true celebration of the mystical Tropical Style
An artificial sand beach has been
changed at all, while micro ecology can be
materials that cause light- and chemical-pol-
designed near the pool area containing a sand
improved through environmental designs. As
lution, such as glass, stainless steel, chemical
volleyball court and cabanas for relaxation
for improvement of micro ecology, the follow-
building materials, should be used sparingly.
near the water’s edge. All of these unique
ing four aspects express the trends of en-
While some natural materials such as bam-
neighborhood features included within The
vironmental developmental design within
boo, timber, brick, stone and steelwork can
Bund’s landscape will surely add drama and
Shanghai: 1. Greenery lies first in Ecology.
be used as much as possible to integrate
fun to the resident’s experience and offer a
Large lawn areas are not suitable for
with local cultural characteristics. So in this
rich variety of activities for people of all ages
Shanghai’s common residential communities
way, not only do the residents feel close to
to enjoy and experience.
due to land shortages and the climate of the
the features, but also the ecology will not be
Finally, trekking trails have been incorpo-
city; however, a combination of trees and
destroyed. 4. Fine micro environment and
rated throughout the neighborhood’s land-
plants can be important. When selecting
micro ecology should not only just be
scape affording exciting and rewarding alter-
evergreens and trees, developers need to
expressed in the foreside of the community
natives to the typical residential living experi-
adopt some tree species with special healthy
or critical locations, but also in the center of
ence. The trail system enables residents an
functions such as Cinnamomum camphora,
community or surrounding the house so that
opportunity to explore the neighborhood’s
Ginkgo biloba Linn, etc. According to prac-
each family can enjoy the ecological environ-
flora and fauna within the naturally beautiful
tice in some residential areas, bamboo can
ment. There should be enough distance
setting of The Bund.
be important in terms of ecology, aesthetics
between the residences, if the designer
been
and culture. 2. The main part of ecological
wants to achieve this effect. Therefore, the
designed to celebrate the enchanting quali-
environment is vegetable-animal-microbe,
proportion of big distance and lower cover-
ties, elements and traditions of Tropical
the important biological chain which
age residence will go up.
The
Tropical
landscape
has
JANUARY / FEBRUARY 2009
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27
DEVELOPMENT SPOTLIGHT
The Shimao Riviera Garden
28
The Shimao Riviera Garden is located in Lu
est river-front luxurious residential building
Jia Zui Financial & Trade Area, the east bank
in the “Guinness Book of World Records.”
Headquarters of the U.N. The No.5 Building occupies the best
of Huangpu River in Shanghai. The site area
The community invested a great
geographic location of the community, fac-
is about 275,000 square meters and the total
amount to build a number of clubs repre-
ing the bund and looking out upon the
building area is about 920,000 square
sented by the “American Council” and six
Huangpu River. The units are between 92
meters. The seven luxurious super high-rises
world theme garden areas, covering 70 per-
square meters and 586 square meters. The
of 45-55 levels extend nearly one kilometer
cent of the total area. The gardens include
actual deliverable decoration covers world
along the river, facing the splendid night
Chinese Suzhou Garden, American Hawaii
top designers and a number of world top
view of the bund and overlooking the site of
Surfing Beach, German Green Shade Swan
brands. Crystal, pearl shell and cortex wall cur-
World Expo Shanghai 2010.
Lake, British Grand Lawn, French Maze
tains and other elements are well adapted
Standing shoulder to shoulder with the
Garden and Olympic Sports Garden, with its
here and become the deliverable standard.
Oriental Pearl TV Tower, the building makes
own specific style, and was awarded the first
The basins, water faucets, cabins and elec-
up a grand urban skyline of “One Wave,
prize of the 8th “International Garden
tronic kitchen facilities are all of world top
Three Peaks” with the other two on the
Community” Man-made Category Golden
brands, which provide a perfect life style com-
Huangpu River and is recorded as the high-
Prize issued by the Environment Planning
parable to world top luxurious housing. are
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JANUARY / FEBRUARY 2009
DEVELOPMENT SPOTLIGHT
The 6 world leading theme garden areas of Shimao which cover 70 percent of the total area contribute to its unique style. Shimao was awarded the first prize of the 8th “International Garden Community� Man-made Category Golden Prize issued by the Environment Planning Headquarter of the U.N.
Renzo Zhang is Chairman of HZS USA LLC. As chairman he divides his time between management and marketing functions, as well as making significant contributions to architectural and urban design in the firm. He has been director and principle designer for many notable projects in the United States and China. HZS USA is headquartered in Atlanta, with branch companies in Shanghai, Hong Kong and Manila. Zhang can be reached via e-mail at hzs@hzsusa.com.
JANUARY / FEBRUARY 2009
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REAL ESTATE ACROSS THE
Pacific
PERSPECTIVE
Views from an Asian and U.S. perspective BY SCOTT HOOVER
M
ichael Jones first visited Thailand in 2005 and he was impressed. He enjoyed the weather, the natural beauty of the countryside, the culture and overall friendliness of the people. Over the next year, Jones visited Thailand four more times, taking in the standard tourist attractions the country has to offer, but also soaking up the overall ambiance and atmosphere of the country. He was amazed how safe he felt traveling the country and how convenient and inexpensive everything was compared to other western societies. He began to imagine himself living here — purchasing a property and using it as a base to tour within Thailand, Asia and beyond three to six months out of the year. His interest was captivated by the possibilities. Jones’ story is being repeated on an increasingly more regular basis throughout the world. More and more, people and businesses alike are turning to Asia for its cultural diversity, economic stability and inexpensive locales. They are not only using these new accommodations as a platform for travel, but also entrenching new roots into an unfamiliar society by opening businesses and setting the groundwork for family and friends to follow.
JANUARY / FEBRUARY 2009
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31
PERSPECTIVE
Here & There
Asia’s economic expansion is expected to
In the United States, the housing bubble has
drive demand for real estate, attracting inter-
burst. The value of houses continues to fall,
est from investors drawn to rising rents, Faber
triggering defaults in the subprime mortgage
says. East Asian economies, including China
market and unfolding financial turmoil, which
and India, are expected to expand 4.4 percent
doesn’t seem to have an end in sight. The
the rest of this year, compared with 2.7 per-
banking system — uncertain about where,
cent in the U.S. and 2 percent in Europe,
and how big, the risks are — has put on the
according to the Asian Development Bank.
brakes, resulting in our current credit crunch.
Rental rates for office space in Singapore’s
Consumer confidence, income, and sales all
central business district rose to $644 a square
continue to be distressed and inflation is on
meter ($60 a square foot) at the end of 2006,
the rise.
still lower than the $692 landlords were fetching in 1996 before the Asian financial crisis. China and Vietnam, two of Asia’s fastest
Asia’s economic expansion is expected to drive demand for real estate, attracting interest from investors drawn to rising rents.
growing economies, have become attractive real estate markets. Vietnam’s economy, which expanded 7.4 percent annually in the past decade, is expected to grow at least 8 percent a year in the next 10 years, according to government forecasts. China’s economy, which expanded 10.7 percent in 2006, the fastest since 1995, has grown an average of 9.2 percent in the past decade.
A Different Market Ever dream about buying a little place in In the high-income countries of Asia, eco-
downtown Tokyo or investing in a business in
nomic growth is also beginning to ease due to
Vietnam? Buying property in a foreign country
lower internal demand, decelerating industrial
is no small task, but more and more Americans
production, and declining exports. As a conse-
are finding benefits to moving abroad. Today
quence, credit conditions are getting tighter
there are more than four million citizens living
everywhere. However, according to experts,
outside the country.
Asian real estate still offers better value than
Additionally, there are a number of
property stocks because the region’s equity
opportunities in both the residential and com-
markets are still “vulnerable.”
mercial Asian real estate market that investors
“I’m optimistic about Asia and emerging markets,” says investor Marc Faber, who oversees $300 million in assets at Hong Kong-
32
a|r|e
or those looking to make a move might be interested in. Rob Mehta, ABR, CIPS is a certified inter-
based Marc Faber Ltd. “As an asset class, real
national
estate in Asia presents tremendous opportu-
Minnesota Association of Realtors who has
nities” as “urbanization gets under way.”
been investing in Asia and the United States
JANUARY / FEBRUARY 2009
property
specialist
with
the
PERSPECTIVE
for years. He says Asian real estate fundamen-
However, it is not only residential real
tals are very strong and the markets remain
estate that is encouraging. Mehta says that
attractive, with strong demand from occu-
commercial real estate offers tremendous
piers and only modest levels of new supply in
opportunities for investments due to the con-
the near term, which opens up a number of
tinuing growth of Asian economies.
possibilities.
“In the commercial sector, rehab oppor-
“Some of the opportunities in the Asian
tunities, as well as buy and hold/long-term
residential market include second homes,
lease opportunities are some of the best and
resort properties with income potential,
most exciting long-term options for American
homes that are suited to the ‘expat’ retiree, as
investors who are looking to break into the
well as a number of other niche opportuni-
Asian market.”
ties,” he says. “The exciting thing about the
Of course, investors also need to be
Asian market is that, compared to more
aware that there are many differences in the
mature markets such as the United States, the
Asian real estate market when compared to
market is still in its infancy, so the opportuni-
the U.S. real estate market and that those who
ties that exist, as well as the potential for
are interested in purchasing in Asia need to do
return, can be fantastic.”
their due diligence.
JANUARY / FEBRUARY 2009
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33
PERSPECTIVE
“I started doing research on the Internet
“I had only two days in each location,” he
and then I decided to do more onsite
says. “I found it hard, in this way and as a
research,” says Jones. “I had ruled out Chaing
stranger to the country and its property mar-
Mai and the north as being to distant from the
ket, to get a comprehensive idea of the areas I
rest of Thailand, so I concentrated on the areas
was looking at. I had a short and somewhat
that had tourist infrastructure and were on the
random list of properties in each location from
coast, as well as Bangkok.
my Internet research, but I was obviously missing most of the opportunities and I had no real
Enlist the help of a real estate broker to help you figure out unfamiliar laws and customs.
way of telling what I was seeing.” It was at this point that Jones became aware of a real estate tour of Thailand being arranged by Company Vauban located in Bangkok. “I felt this was exactly what I needed,” he says. “A local company, experts in the market who could sieve through many opportunities
34
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Jones first visited Koh Chang, a beautiful
to present the most attractive to potential
and relatively undeveloped island near the
buyers. The fact that it had real estate profes-
southeast extremity of the country. He then
sionals with Western experience meant that
worked his way up the coast via Koh Samet
they would be presenting the type and quali-
and Pattaya to Bangkok.
ty of property that would appeal to Western
JANUARY / FEBRUARY 2009
PERSPECTIVE
buyers. The tour was quite intense, covering Hua Hin, Pattaya and Phuket in three days, but also quite sociable and enjoyable. There was also a useful briefing beforehand on Thai property law as it affects foreign buyers.” Mehta says Asian markets can be vastly different and many times a tour arrangement such as the one Jones took, is one of the better ways for novice buyers to get a good overall view of the market. “There are many differences in the two markets, as one might expect; however, the main difference is the lack of a widespread mentality of purchasing a property to ‘flip’ as there used to be and still is in the United States,” says Mehta. “Buyers in the Asian markets are thinking and making purchases for the long term, which brings greater stability to the market. In addition, there is a lack of speculation buying, which again only helps keep the market stable in most countries, and keeps artificial price inflation at bay.” Investors will also have to find out the rules about foreign ownership for the country you’re interested in. Some countries restrict foreign ownership altogether. You
particular country’s government, land-use
can find that information on the Inter-
rights and property ownership laws, and other
national Consortium of Real Estate Associa-
legal entanglements that can come up when
tions Web site at www.icrea.org.
buying as a foreigner,” he says. “There also are
You’ll also want to check with the U.S.
transaction costs associated with the pur-
State Department about the stability and
chase and disposition of property, as well as
safety of the countries you may be interested
the lack in most emerging markets for the tra-
in moving to. For that information, see
ditional mortgage financing for the foreign
www.travel.state.gov.
buyer.”
Mehta notes that country stability and
Mehta says if you’re thinking about buy-
rules on real estate ownership are two of the
ing overseas, you also may want to enlist the
major concerns that most U.S. investors have
help of a real estate broker to help you figure
when they consider purchasing property in
out unfamiliar laws and customs.
Asia.
For example, if you want to buy property
“Some of the concerns we have seen from
as a foreigner in Malaysia, you’re welcome to
foreign investors include the stability of the
do that. But if you decide to sell your property,
JANUARY / FEBRUARY 2009
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35
PERSPECTIVE
The future continues to look bright for the Asian real estate market.
you’ll have to keep your money in a Malaysian
sided. “I believe there is a concern in Asia of too
bank account.
many properties being purchased and con-
To figure out what you can afford over-
trolled by foreign entities,” notes Mehta. “In
seas, assume you can pay cash only. Financing
addition, there also are concerns about the
mechanisms such as mortgages aren’t as
potential risk to national and economic inter-
sophisticated as they are in the United States,
ests that this presents to a particular country.
says Mehta.
Thus, most countries have strict property own-
“You won’t find dozens of mortgage lenders offering you a loan,” Mehta says. “In many countries transferring property is historically paid for in cash.”
In the end, Jones tour took him to a number of different cities where he was able to see
If you can’t afford to buy property without
three or four developments all at the stage of completion where potential buyers could see
speaking countries and former colonies such
a model of what the finished product would
as Singapore and Hong Kong. But even then,
look like.
40 percent. Investors also need to be aware that concerns about investing in Asia aren’t only one-
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owned and controlled by foreign interests.”
a mortgage, you’ll want to check out English-
you should be prepared to put down at least a
36
ership laws that curtail how much can be
JANUARY / FEBRUARY 2009
He decided on Pattaya, located on the east coast of the Gulf of Thailand and known as one of the most successful beach resorts in the world.
PERSPECTIVE
“The building took a little longer than
Asian market has only one way to go-and that
anticipated, mainly weather delays but I was
is up,” says Mehta. “There may be slight ups and
not in a particular hurry and the villa has been
downs, just like there are in any market, but to
finished to my complete satisfaction,” he says.
the astute investor that is buying for the long-
“I am very happy with the quality and the style
term, the ups will outweigh the downs many
of the property. Although I am yet to live in the
times over. I still feel the market is in it’s infan-
property, my entire experience in getting into
cy, with lack of financing and many legal hur-
the Thai property market has been a pleasure,
dles to clear, but once the process becomes
thanks mainly to my good fortune in dealing
more transparent — as well as having more
with top-quality professionals at both the
financing options — this will bring a flood of
property selection and building stages, which
new buyers into Asia, and then we will really
is the main advice that I would give to others
see some strong price appreciation. In my
looking in Asia.”
mind, anyone who invests today in Asia will
And, the future continues to look bright for the Asian real estate market. “I think the
not look back in 20 years and be disappointed at their investment.”
JANUARY / FEBRUARY 2009
are
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37
PLANNING
Navigating the Waters
BY JOHN HASKELL
SET A COURSE TO AVOID THE ROUGH SEAS
B
usiness is tougher today than it was a
There is only one cure for this mistake:
year ago. Recently, a mid-sized company
Write a plan. The format is simple:
evaluated its situation: It faced a quickly
shrinking market, and people just weren’t buy-
Goals: Establish your goals. These need to be
ing as much. Competition was cutting prices in
hard-edged goals; avoid marshmallow market-
spite of higher costs. Salespeople were losing
ing, such as soft sales targets, undefined goals,
business all over the country. What options did
weak market data, ineffective advertising and
they have to improve the business? They started
vague promotion schedules. Marshmallows kill!
by asking themselves two questions: First, what were they currently doing? Second, what had
Problems: Identify the major problems that
they not done in the past?
stand in the way of reaching your goals.
Five specific areas tend to stand out in examinations like this. Individually, each is a
Opportunities: Spell out the opportunities
problem; collectively they can spell disaster for
that offset the problems. For example, you may
your business. Luckily, it isn’t impossible to elim-
not be well-known, but there is an opportunity
inate these mistakes, as long as you have the
because those who do know you like your com-
discipline and desire. Here are the five fatal busi-
pany and the service you offer.
When the economy bounces back, you will reap tremendous benefits.
ness mistakes you could be making:
Strategy: Define a longer-term strategy — 1. No Marketing Plan
this is the “What?” statement. What do we want
The marketing plan is the starting point, as it
to be four or five years down the road?
allows the entire company to know the tactics to achieve the goals.
Tactics: Define your tactics very specifically. JANUARY / FEBRUARY 2009
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39
PLANNING
This section of the plan, accompanied by a
data that allows a company to build market-
marketing calendar and at least an adequate
ing, merchandising, advertising, and sales
budget, provides the road map for execution,
promotion tactics that work. The prescription
which leads to sales success.
has three parts: do the research, listen very
This simple prescription for constructing a marketing and sales plan makes it easy —
carefully and, most importantly, act decisively for the long term.
you write to the outline. Take your time and fill in the blanks. Start with opportunities.
4. No Sales Forecasts
Then sort the opportunities in order of prior-
Planning for the business begins with a sales
ity.
forecast. If the management team does not look forward, they will get constant surprises. Forecasting in most smaller and mid-sized
PLANNING FOR BUSINESS BEGINS WITH A SALES FORECAST.
businesses can be confined to customers who contribute a significant percent of sales. Building a forecast for a customer involves a careful, in-depth analysis of the customer’s business, the customer’s relationship with your company and the customer’s marketing plan for the next year.
2. A weak or non-existent factual understanding of the marketing environment — your company doesn’t have a competitive matrix
The only person who should do the sales forecast is the salesperson who is closest to that customer. Each salesperson must forecast for their
Every company has a position in the mar-
major customers with a fill-in the blanks,
ket based on specific attributes. For example,
paint-by-numbers approach. There are no
a cookie company judges its position by the
excuses. The forecast must be completed by a
taste, price, size, and location compared to
specific date and the salesperson must be pre-
nearby competitors who are making a similar
pared to discuss the rationale behind the fore-
product.
cast.
These facts provide many opportunities
Let the chips fall where they will. The dif-
to get insight into your position in the market.
ference between the sales group’s forecast
Narrowing them down to black and white,
and the management’s goal for the year is
analyzing the vital differences and planning
called the “planning gap.” Filling that gap is
how to respond to the competitive environ-
what marketing and management are all
ment is the prescription for success.
about. The marketing team’s job is to eliminate excuses by salespeople.
40
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3. Lack of understanding of your customer’s real buying motivation
5. No sales system
The psychology of the customer is vital to
Sales management is key to success. Effective
marketing and sales success. Small business-
selling is the result of a complete system.
es may not be able to afford extensive market-
Effective salespeople are “self-managed pro-
ing research, but simple questionnaires and
fessionals.” Self-managed professionals know
low-cost focus groups can deliver the vital
that phone calls must be organized before-
JANUARY / FEBRUARY 2009
PLANNING
hand, records must be kept and selling is a disciplined process. Effective, professional selling is based on utilizing the company’s marketing program to create a working marketing and sales plan for each significant customer. The self-managed professional salesperson has a game plan for every 30-day period. He or she works the plan every day. Every phone call and every visit is designed to further the plan. Becoming a self-managed professional salesperson starts with this statement. “I know my customer, I know my company’s products and I know my company’s marketing plan. My job is to bring these three elements together into a short- and long-term plan for each of my best or potentially best customers. I sell products that will not come back to customers who will.” Eliminating these mistakes allows a business to solidify its position in the market and move forward regardless of the economy. Very few companies have large market shares. Therefore, if your company has eliminated these mistakes and is moving forward, you are positioned to take a little business from each of your competitors who have not eliminated the mistakes. A little here, a little there and you are doing more than holding your own — you are growing your share of market. When the economy bounces back, you will reap tremendous benefits.
are
John Haskell is a professional speaker, seminar leader, marketing and sales consultant and author of “Profit Rx.” As a former CEO/COO of divisions of Fortune 500 companies and as president of The Professional Marketing Group, Inc., he consistently demonstrates the value of written marketing and sales planning. He helps his clients write and implement marketing and sales plans, and his “Dr. Revenue Marketing and Sales Clinics” result in immediate sales and marketing focus. For more information, visit www.drrevenue.com or e-mail drevenue@drrevenue.com.
JANUARY / FEBRUARY 2009
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41
ederal Housing Administration (FHA) insured
those are no longer on the mortgage radar
loans, once a staple of home lending but con-
screen. Yet the opportunities for FHA assistance
sidered an afterthought in recent years, has re-
have spread to AREAA’s target markets as a
emerged as a beacon of stability and assurance
whole. And that’s a good thing for buyers in
in tough housing times. And that is very good
AREAA’s core markets, who now have more
news for AREAA members and their customers.
opportunities than they might think.
Until recently, this 70-plus year old maining’s sidelines, all but forgotten as glitzier —
Is FHA a good match for AREAA customers?
and less cumbersome — mortgage programs
With a customer base noted for high credit
moved to the forefront. When Congress
scores and substantial down payment amounts,
addressed the competitive and modernization
AREAA members might overlook FHA as a loan
issues of FHA insured loans, the safety and
solution for their buyers. However, AREAA bro-
security of these mortgage products became
kers and Bank of America executives familiar
a welcome sigh of relief for AREAA members
with changes to FHA loans cite multiple bene-
with customers ready and willing to buy a
fits that put FHA in the lending spotlight for
home. As was AREAA, Bank of America was a
AREAA Realtors.
stay of homeownership was relegated to hous-
supporter of FHA modernization.
“To slot FHA loans as only for first-time
The upshot of federal housing legislation is
buyers excludes thousands of other Asian
that FHA-insured loans have reclaimed a place
American homebuyers who could use all the
as a great option for homebuyers — particular-
added benefits that have been built into FHA,”
ly first time homebuyers. FHA loans have all the
says Allen Jones, government lending execu-
hallmarks of a responsible source of lending
tive for Bank of America. “It is a much sleeker
that Bank of America has long supported.
and far more understandable process that has
Indeed, until these recent changes many cus-
built-in pluses for buyers in high cost markets
tomers had frequently seen themselves as only
which have been a strong base for many AREAA
qualified for high-cost, exotic loans — and now
members.”
FHA LOANS
FHA in Right Place, at Right Time for AREAA Customers BY GLENDA GABRIEL
F
ederal Housing Administration
particularly first-time homebuyers. FHA loans
(FHA) insured loans, once a staple of
have all the hallmarks of a responsible source
home lending but considered an
of lending that Bank of America has long sup-
afterthought in recent years, has
ported. Indeed, until these recent changes many
reemerged as a beacon of stability and assur-
customers had frequently seen themselves as
ance in tough housing times. And that is very
only qualified for high-cost, exotic loans — and
good news for AREAA members and their customers. Until recently, this 70-plus year old main-
To slot FHA loans as
stay of homeownership was relegated to housing’s sidelines, all but forgotten as glitzier —
only for first-time buyers
and less cumbersome — mortgage programs moved to the forefront. When Congress
excludes thousands of other
addressed the competitive and modernization issues of FHA insured loans, the safety and
Asian American homebuyers.
security of these mortgage products became a welcome sigh of relief for AREAA members with customers ready and willing to buy a
now those are no longer on the mortgage radar
home. As was AREAA, Bank of America was a
screen. Yet the opportunities for FHA assistance
supporter of FHA modernization.
have spread to AREAA’s target markets as a
The upshot of federal housing legislation
whole. And that’s a good thing for buyers in
is that FHA-insured loans have reclaimed a
AREAA’s core markets, who now have more
place as a great option for homebuyers —
opportunities than they might think.
JANUARY / FEBRUARY 2009
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43
FHA LOANS
Is FHA a good match for AREAA customers?
commissioner Brian Montgomery with pulling
With a customer base noted for high credit scores
FHA up by its bootstraps.
and substantial down payment amounts, AREAA
That FHA has emerged as a strong player in
members might overlook FHA as a loan solu-
the current housing upheaval has reassured
tion for their buyers. However, AREAA brokers
agents and brokers alike that there is a rock-
and Bank of America executives familiar with
solid source of insured loans — with relatively
changes to FHA loans cite multiple benefits
low down payment requirements — in today’s
that put FHA in the lending spotlight for AREAA
housing arena. So strong is Bank of America’s
Realtors.
government lending business that it has two
“To slot FHA loans as only for first-time buyers excludes thousands of other Asian
fulfillment centers that deal exclusively with government loans.
American homebuyers who could use all the
In California alone, Bank of America’s FHA
added benefits that have been built into FHA,”
lending volume has grown tenfold in less than two years, with average mortgage amounts topping $265,000.
There is a clear need for more education
“It’s been a good business that will only grow because the market is right for govern-
to bring AREAA real estate practitioners
ment lending. Government lending is on the
up to date on government lending.
resurgence coincides with a sagging housing
rise,” says Jones. The fortunate timing of FHA’s market that needed the stability FHA lending offered to the residential marketplace. According to AREAA member John Wong of
says Allen Jones, government lending execu-
Prudential California Realty in San Francisco,
tive for Bank of America. “It is a much sleeker
“FHA is not a product that has been commonly
and far more understandable process that has
used in high-cost areas such as California where
built-in pluses for buyers in high cost markets
many Asian American communities are located.
which have been a strong base for many
It is underutilized by Asian Americans.”
AREAA members.”
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Now, he says, FHA lending has “absolutely
Loan limits for single-family homes in high
gotten the attention” of himself and other
cost areas has risen to $729,750 on a 30-year
AREAA members. Prior to the FHA update,
fixed rate loan. That is very much a plus in high-
Wong says there was a “market side influence
cost markets such as California and New York
with other loans needing less documentation
where many AREAA customers reside.
and a shortened approval process. Those were
The market share for FHA lending has
paths of less resistance and many consumers
soared to nearly 50 percent of home loan orig-
and Realtors took that path.” Wong also says a
inations, and that total was in the single digits
protracted vetting process for FHA also turned
as recently as one year ago. Jones credits FHA
away real estate agents and their customers.
JANUARY / FEBRUARY 2009
FHA LOANS
However, the idea of a complete vetting
example, the down payment on a
other entities who can provide down payment
process once seen as cumbersome has come
$150,000 home or condo would be as
assistance, too.
full circle. Loan products with minimal vetting
low as $5,250.
and documentation have contributed to the
•
Educate, educate, educate Families can contribute toward the
There is a clear need for more education to
American buyers, including recent immigrants,
down payment. It’s always good to save
bring AREAA real estate practitioners up to
find assurance in a fully vetted FHA process.
for a down payment, but family members
date on government lending.
Wong calls a thorough process “the wisest
are allowed to help toward that total.
housing turmoil of today. Many Asian Pacific
thing for homebuyers.”
•
Bank of America has led numerous workshops on that very topic and plans to continue
Don’t forget a $7,500 tax credit toward
that thrust. Wong says it is important for
an amendment to the Housing and Economic
home purchase. The federal legislation
AREAA members to know all they can about
Recovery Act of 2008 requiring a FHA pilot pro-
also created a one-time $7,500 tax credit
FHA.
gram for the automation of mortgage applica-
for first-time buyers who earn $75,000 or
tions for individuals with limited traditional
less (for single buyers) or $150,000 (for
markets,” says Wong, noting “there is a great
credit histories.
dual household earners). The credit is an
thirst for knowledge of how it works.” When
In addition, AREAA was vital in in getting
“We need to be evangelists for this in our
"The use of alternative credit factors such
itemized deduction on your federal tax
he attends workshops where FHA is men-
as rent, utilities and insurance payments will
forms. Note: The credit is good only for
tioned, he sees “heads nod in the room” from
assist many Asian Americans and immigrants,
homes purchased before July 1, 2009. Be
Realtors who think ‘I’d better learn about this
as well as first-time homebuyers qualify for FHA
sure to talk to a tax professional for all the
because this is a better product for my cus-
insured mortgages," says Jim Park, President of
great details about this credit.
tomers.’
AREAA. "Oftentimes these borrowers must look to less affordable, unconventional mortgage
•
are
Sellers can contribute toward
programs, regardless of their income or assets,
your closing costs. Although sellers
due to a lack of traditional credit history. AREAA
cannot contribute toward your down
believes that this provision will help more indi-
payment, they can chip in as much as 6
viduals in minority and immigrant communi-
percent toward your closing costs.
ties qualify for affordable financing and provide
However this is a negotiable item so make
those who have been responsible with their
sure you and your Realtor know as much
finances the opportunity to purchase their first
as you can about this incentive for sellers.
home." FHA does not limit the sources of down
The strong upside for FHA loans
payments. Indeed, there may be other sources
There are many upsides for AREAA members to
of down payment assistance for buyers even
use an FHA loan. They include:
though seller-funded lending is no longer
•
allowed. Local housing finance authorities, Low down payment. FHA loans require
such as the California Housing Finance Agency
as little as a 3.5 percent down payment.
(CalHFA) is a good place to start, and local Bank
That makes a home more affordable. For
of America mortgage loan officers may know of
JANURAY / FEBRUARY 2009
GLENDA GABRIEL is a Neighborhood Lending Executive for Bank of America. For more information please call (800) 344-9403 or visit www.bankofamerica.com.
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45
CREDIT MATTERS
Credit Where it’s Due B Y E DWARD J AMISON , ESQ F OUNDER , C REDIT CRM AND T HE J AMISON L AW G ROUP
A
lot of consumers have the mind set that making your payments on time
Payment History – The most important category.
automatically equates to good credit
This category is pretty self-explanatory. It
and credit scores. Unfortunately, this couldn’t
doesn’t take a rocket scientist to figure out that
be further from the truth. While paying your
if you pay your bills on time, you’ll do well in
bills on time accounts for a large portion of
this category. Likewise, if you have a history of
your credit score, there’s still a lot more to it. In
late payments, collections, charge-offs, public records, etc. — you’re not going to do so well in this category. In addition, the number of
It takes a whole lot more than just paying your bills on time to earn great credit scores— your customers need to know it.
negative items on your credit reports is important. The more incidents of credit transgressions, the more your score will suffer. And if you have recent negative information that will punish your scores more than if they are several years old.
fact, paying your bills on time only drives one-
46
a|r|e
third of the points in your credit score, which
Debt – A very close second. The most
means that two-thirds of your score has noth-
important non-payment category in your cred-
ing to do with making on time payments.
it score is, by far, the amount of debt that you
Working with your clients and letting
carry. And while your installment debt (auto
them know what it takes to have good credit, is
loans and mortgages) are factored into your
important an important part of your job that
scores, it’s really your credit card debt that’s
you might not have ever considered. Therefore,
most important. This includes anything from
here are five main categories that go into an
Visa, Master Card, Discover, American Express,
overall credit score calculation. Let’s briefly
gas cards and/or retail credit cards such as
review each category and how much they
Macy’s or Target. The balances that you carry on
count so that you can have credit-informed
your credit cards can affect your scores almost
buyers.
as much as whether or not you make your
JANUARY / FEBRUARY 2009
CREDIT MATTERS
Total Balances
$12,000
Total Credit Limits
Total Revolving Utilization
Utilization Percentage
÷ $25,000
= .48 X 100
48%
payments on time. This category calculates the
should try to keep your revolving utilization at
proportion of balances to credit limits on your
10 percent or less. If you can’t reach 10 percent,
revolving credit card accounts — also referred
just remember that the lower the better. While
to as “revolving utilization.” Simply put, the
50 percent is better than 60 percent, 40 per-
higher your revolving utilization percentage,
cent is better than 50 percent and so on.
the fewer points you will earn in this category.
How you pay your bills and your revolving
So what is revolving utilization and how is
utilization are by far the most important fac-
it calculated? To determine your revolving uti-
tors used to determine your credit scores. They
lization, you’ll need to add up all of your cur-
account for two-thirds of the points in your
rent balances and all of your current credit lim-
score. That’s a hefty chunk! Needless to say, if you don’t do well in both of
How you pay your bills and your revolving utilization are by far the most important factors
these categories, your scores aren’t going to be very good regardless of how you do in the remaining categories. While the remaining categories are worth fewer points, they are still very important for
its on your open revolving credit accounts
consumers who want to earn the highest
(except for Home Equity Lines of credit). This
scores possible, certainly a requirement in
will give you a total balance and a total credit
today’s difficult credit environment.
limit. Divide the total balances by the total 100. This will give you your total revolving uti-
The Age of Your Credit History – Secondary category.
lization percentage. See the example provided
Don’t confuse this with your age. It’s the age of
above.
your credit reports. Basically, the score is look-
credit limit and then multiply that number by
48
a|r|e
Remember, the lower your utilization per-
ing to see if you have a lengthy history of man-
centage, the more points you’ll earn and the
aging your credit obligations. The age of your
higher your credit score will be. To earn the
credit history is determined by the “date
most possible points in this category, you
opened” on the oldest account listed on your
JANUARY / FEBRUARY 2009
CREDIT MATTERS
credit report. The older your credit report, the
“inquiry.” To perform well in this category, you
more points you will earn in this category.
should really only apply for credit when you
There’s really not much you can do in this cate-
need it.
gory except wait it out. As your reports get means that you should never try and get old,
Credit Mix – Secondary category.
good accounts removed from your credit
What types of accounts do you have? You will
reports. You want the history!
do well in this category if you have a nice
older, you will gradually earn more points. This
diverse list of different types of accounts in
New Credit/Inquiries – Secondary category.
your credit report. This includes mortgages,
When you apply for credit you are giving the
If your credit report is dominated by one type
lender permission to pull your credit reports
of account (or lack of others), this could nega-
and credit scores. Each time this happens, your
tively affect the number of points that you
credit report will reflect what’s called an
earn from this category.
auto loans, installment loans, credit cards, etc.
are
Credit Scoring Factors: How you pay your bills – on time is good, late is bad How much you owe your creditors – keep your credit card debt low (10 percent utilization is optimal) How long you’ve had credit – the longer the better How often you apply for credit – apply only when you really need it Account mix – diversity is good There you have it. If you can have your perspective home-buyers stick by these five key principles, they should be well on their way to healthy credit and credit scores and into the house of their dreams.
JANUARY / FEBRUARY 2009
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49
Working Together
DIVERSITY ALLOWS HOUSTON’S ASIAN AMERICAN COMMUNITY TO CONTINUE TO GROW BY SCOTT HOOVER
HOUSTON IS THE FOURTH LARGEST CITY IN THE UNITED STATES AND HAS ONE OF THE BIGGEST — IF NOT THE BIGGEST A SIAN POPULATIONS IN THE S OUTH .
OF
KENNETH LI, CCIM, CRS, CIPS, GRI CENTURY 21 SOUTHWEST IN HOUSTON
GROWTH
he United States of America proved
“Over the past 20 years, Houston’s Asian
once again on November 4 why it is
American population has grown and today,
considered the most diverse nation in
Koreans, Chinese, Japanese, Vietnamese,
the world. By electing Barack Obama to its
Indians and Pakistani all make up a very vital
highest political seat, U.S. citizens again
and growing business group in Houston.”
T
showed the world that our nation welcomes
Why is Houston so attractive to Asian
ethnic groups from around the globe. The
Americans? Li says there are any number of rea-
American Dream really is readily available for
sons that Asian American business owners
anyone, no matter what your heritage or eth-
seem to flock to the Houston area.
nicity.
“One of the main reasons is the weather,”
Maybe one of the best examples of
notes Li. “It is very similar to the weather in
America’s worldwide reach is the city of
southern Asia with the fantastic mix of sun-
Houston. Blessed with fabulous weather year
shine and an average temperature right around
round, a truly diverse culture, and great educa-
70 degrees, and highs in the summer averaging
tional opportunities, Houston’s quality of place
84 degrees and winter lows averaging about 50
makes it one of the best areas in the world for
degrees. Asian Americans and those that have
people to live. From business opportunities to
moved from Asia are comfortable with the
recreation, from high culture to haute cuisine,
weather.”
Houston has it all and those are just some of
Another reason for the growth of the Asian
the reasons that Asian Americans have flocked
American community in Houston is the busi-
to Houston over the past 20 years.
ness and educational opportunities the city offers.
Houston’s Asian Community Houston is the fourth largest city in the United
apartment community or a brand new home in
States and has one of the biggest — if not the
Houston’s suburbs, you have thousands of op-
biggest Asian populations in the South. From
tions to suit your tastes and your budget,” says Li.
Houston’s Chinatown (Old and New) to Little India and Little Saigon, Houston’s diverse Asian American community has seen explosive growth since the early 1980s. “In 1981, when I started attending Houston Baptist College, there were approximately 25,000 Asian Americans who called Houston home,” says Kenneth Li, CCIM, CRS, CIPS, GRI of Century 21 Southwest in Houston. “Today, there are more than 300,000 Asian Americans FACING PAGE: DESIGN BY WILLIE YANG
“Whether you choose high-rise living, an
living in Houston and this number is growing every day. That means the Asian American community in Houston makes up nearly 8 percent of the total population of Houston — that is significant.” Li, who is Chairman of the Asian American Business Council in Houston, says the growth has been dramatic and diverse.
PHOTOS ON PAGES 53-57 SUPPLIED BY JAMES CHEN, EBAO NEWS MAGAZINE
GROWTH
“And, speaking of budget, Houston has one of the lowest costs of living anywhere in the country. Houston’s housing costs in cities of more than two million people are 44 percent below the national average. Its cost of living costs are 23 percent below the average.” New Growth Diverse The Summer Olympic fever has started to wear off but the focused attention on China it provided brought more and more people to one of Houston’s most diverse areas Chinatown. Known as New Chinatown, as opposed to the smaller, Old Chinatown downtown, the area sprawls between Beltway 8 and S. Gessner Road, bordered by West Park Tollway and Leader Street. The heart is Bellaire Boulevard, where Chinese street signs, restaurants and shops dot the landscape. According to the Chinese Community Center, the origins of the southwest Chinatown began in 1926 when a store called Quong Yick opened there. Today, the area includes a lot more shops. Asian stores are everywhere, but serious shoppers flock to Hong Kong City Mall, the largest indoor Asian mall in the Southwest. There’s also the Jade Buddhist Temple at 6969 Westbranch, where a three ton white jade Buddha reigns over the serene scene. The Chinese Community Center, the largest Asian-led social service agency in Texas, provides educational, cultural and social services to more than 7,000 families a year. Begun as a Chinese-language school in 1979, the center today offers everything from senior care to dragon and dance teams. Houston has 38.56 percent of the state’s Asian population and is the fourth-largest Asian community in the country, according to U.S. Census Bureau 2000 data. The area features the Dung Huang Shopping Center, which is the biggest Asian indoor mall in the southeastern United States. Dung
54
a|r|e
JANUARY / FEBRUARY 2009
GROWTH
Huang contains more than two dozen restau-
mere couple of months ago and already fea-
rants and cafes and several dozen more offices
tures more than 30,000 fine arts and music
and shops. The beautiful Asian architecture,
books and the most recent newspapers and
colorful gardens and fountains makes this a
magazines from Taiwan.
centerpiece for the Houston Asian community.
Another area of Houston that is seeing dra-
“New Chinatown and specifically the Dung
matic growth is an area known as Little Saigon,
Huang Shopping Center is one of the fastest
where many displaced Vietnamese Americans
growing areas in Houston,” says Li. “Over the
have settled, again for any number of reasons.
past five years, New Chinatown has more than
Lan Nguyen had dreamed of owning a
doubled in size. As investors have found out
house since she immigrated to Southern
about New Chinatown, they have increased
California from Vietnam 11 years ago. But she
their movement to his area of Houston and
and her husband could never scrounge up
with the growth of Chinese and other Asian-
enough money for a down payment, spending
owned banks financing the development, New
most of their paychecks on rent for a cramped
Chinatown’s growth has been explosive.”
apartment in California.
Houston not only offers Asian Americans
Now, Nguyen has moved to Houston
business opportunities, but also recreation, art
where the 29-year-old owns a new four-bed-
and religious opportunities as well. For
room house with a spacious game room and
instance, the Jade Buddah Temple is located in
access to a pool with a water slide — all for
New Chinatown. Built in 1989, Jade Buddha
$200,000.
Temple covers two-and-a-half acres in south-
Nguyen is one of many Vietnamese
west Houston and consists of the Grand Hall,
Americans from California who have flocked to
Kwan-Yin Hall, the Youth Activity Center, a
Houston, lured by cheap real estate, a lower cost
library, a dining hall, several living quarters, and
of living, bountiful business opportunities and a
a lotus pond with a statue of Kwan-Yin as its
thriving, growing Vietnamese community.
centerpiece. In addition to serving the religious and spiritual needs of its members, the Temple
Houston offers a slice of the American Dream to Vietnamese Americans who couldn’t find it in California.
functions as a Buddhist study and research
In San Jose and Orange County, home to
center for many different educational institu-
the country’s largest Vietnamese enclaves, sky-
tions, including Rice University, University of
rocketing rents and staggering housing prices
Houston, the University of Texas, and St. John’s
— even in a down market — have become too
School.
much for some.
Additionally, Houston offers the Splash Art
“At first, we thought California is the best,”
Gallery in New Chinatown. Opened in 2005,
Nguyen said. “It’s sad to move from a place we
Splash Gallery features diversified style of arts
know so well. But here we own a beautiful
with Asian accent art gallery. Various styles of
house and are very comfortable.”
oil paintings, water-color paintings, Asian
Houston has 38.56 percent of the state’s Asian population and is the fourth-largest Asian community in the country.
Vietnamese
business
owners
from
paintings, Contemporary and Abstract paint-
California have followed, expanding or moving
ings are on display and for sale.
their operations to take advantage of the bur-
The Chopin Corner Library is the newest
geoning community and the lack of heavy
member of New Chinatown. This brand new
competition that defines the teeming streets of
Chinese fine arts and literature library opened a
Little Saigon.
JANUARY / FEBRUARY 2009
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55
GROWTH
The Vietnamese American migration to
As people have flocked in, Houston busi-
Houston is a typical California story, particularly
nesses have capitalized, reaching out to Viet-
in immigrant communities where residents
namese Americans in California. Real estate
found their first footing in the Golden State but
agents have advertised houses in California’s
left for places where the cost of living was lower
Vietnamese newspapers. Developers have tried
and the opportunities more abundant.
to persuade businesses to expand to Houston.
Houston’s Vietnamese community, now the
And talk shows on Radio Saigon Houston have
third largest in the nation, numbered about
spread the word of the booming community in
85,000 in 2006 — up a third in just six years,
simulcast shows picked up on California sta-
according to U.S. Census figures.
tions.
Community leaders and real estate agents
Like thousands of Vietnamese immigrants,
in Houston say they started seeing an upswing
Nguyen came to Orange County first, following
in Vietnamese Americans from California five
the refugees who fled Vietnam after the 1975
years ago, driven mostly by the city’s cheaper
fall of Saigon, and built a thriving enclave in
housing. Although Hurricane Katrina brought
Westminster, not far from the Camp Pendleton
in displaced Vietnamese Americans from
Marine Corps base where many were intro-
Louisiana, residents say the California migration
duced to the U.S. at the end of the Vietnam War.
is much larger.
In contrast, the first Vietnamese in Texas were fishermen and shrimpers who were able to resume the lives they’d left behind in Vietnam. Settled near the Gulf of Mexico, they found manufacturing and retail jobs and humid weather that reminded them of home. Since then, Vietnamese businesses have sprouted in pockets throughout Houston. There are Vietnamese supermarkets, large Catholic Vietnamese churches, Buddhist temples and restaurants hawking bowls of noodles that to visitors taste as good as those served in Little Saigon’s pho houses. There are Vietnamesespeaking doctors, lawyers and real estate agents. Even the hottest Vietnamese pop stars stop in Houston. Vietnamese American investors also are pumping millions of dollars into the area, which still has plenty of open space to build shopping complexes and housing subdivisions. “Over in California, you’re just average people,” Nguyen said. “But here, you become
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JANUARY / FEBRUARY 2009
GROWTH
upper middle class. You have more money
Besides its three Indian-oriented newspa-
than people over here. You can buy houses
pers, Houston has various smaller niche maga-
and do business.”
zines carrying news about politics back home,
Houston-area Indian-Americans are also
local events and Bollywood gossip.
expanding and business opportunities with it.
Much like the newspapers, the area known
K.L. Sindwani started a one-man, eight-page
as Little India in Houston also has continued to
monthly tabloid in 1982 to keep Houston’s
grow, attracting Aisha’s Salon & Spa, Mythili’s
then-nascent Indian community in touch.
Beauty Salon and Keemat Grocers, to name just
Those eight pages since have grown to
a few.
44, given birth to two more papers and
They and other businesses that have
caught the eye of mainstream advertisers
spilled over into the neighborhood have
including Citibank, MetLife, Nationwide and
expanded, and many are following the local
H-E-B.
South Asian population to the suburbs, open-
“It’s a recognition of the importance of that community in terms of consumer buying power,” said Jackie Kacen, a marketing professor at the University of Houston. “Census data
ing new locations beyond Hillcroft in Clear Lake, Sugar Land, Katy and Pearland. Many have even started franchising businesses that got their start in Little India.
supports that the Indian-American ethnic
“The community is prospering and spread-
population has a wealthier household than
ing all over the greater Houston area,” said
other ethnic groups.”
Jagdip Ahluwalia, executive director of the Indo-
Today, Sindwani’s newspaper, Indo-
American Chamber of Commerce of Great-er
American News, prints 5,000 copies a week
Houston. “Because of the way American life is,
and leaves them at about 50 locations around
we tend to shop in our neighborhoods, and just
Southwest Houston, including ethnic grocers,
as major stores have branches, these South
coffeehouses, restaurants and other retailers.
Asian businesses are going every which way.”
“Now look at us,” said Sindwani, 80, who came to the United States from New Delhi in
Such is the life in Houston’s growing and emerging Asian American population.
1958 as a student and worked as a sociology
“There are just so many reasons for Asian
professor at Texas Southern University from
Americans to view Houston as their home,”
1975 until he retired five years ago. “We’re a
states Li. “Home owners are still seeing a 5 to 7
business.”
percent growth on the values of their homes;
Nationwide, there are more than two
however the average sales price (approximately
dozen publications catering to the Indian-
$230,000) is still much lower than in other major
American market at large, as well as various
cities in the United States. We are seeing positive
lifestyle magazines, business journals, and
job growth and opportunities have never been
niche publications targeting the market. Most
greater. Finally, Houston is a very vibrant and
are in English, though some small publica-
young city. All of this is very positive and we
tions are in Hindi, Gujarati and other lan-
expect our Asian American population to con-
guages.
tinue to grow for quite some time.”
JANUARY / FEBRUARY 2009
WE EXPECT OUR ASIAN AMERICAN POPULATION TO CONTINUE TO GROW FOR QUITE SOME TIME .
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57
Existing-Home Sales Slide ON TIGHT MORTGAGE AVAILABILITY
E
xisting-home sales were down in August following a healthy gain in July as tight mortgage credit curtailed activ-
ity, according to the National Association of Realtors®. Sales rose in the Midwest and South
but fell in the Northeast and West. Nationally, existing-home sales — including single-family, townhomes, condominiums and co-ops — declined 2.2 percent to a seasonally adjusted annual rate of 4.91 million units in August from an upwardly revised pace of 5.02 million in July, but are 10.7 percent below the 5.50 million-unit pace in August 2007. NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the pendulum in the mortgage market has swung too far. “The difficulty in obtaining a mortgage increased over past couple months, making it more challenging for creditworthy borrowers to find financing,” he said. “Our hope is that overly tight lending criteria can be loosened with reasonable standards and credit so that sales activity can catch up with demand. Interest rates have already declined, but there is a serious question as to whether a cash infusion by the U.S. Treasury into Wall Street would help consumers by improving mortgage funding. “We urge Congress to restore access to
LOAN LIMITS
sound mortgage credit so people have the abil-
Total housing inventory at the end of
In the South, existing-home sales in-
ity to make and keep a long-term investment in
August fell 7.0 percent to 4.26 million existing
creased 0.5 percent to an annual pace of 1.86
the American dream of homeownership. Con-
homes available for sale, which represents a
million in August, but are 15.1 percent below a
gress needs to take care of Main Street and not
10.4-month supply3 at the current sales pace,
year ago. The median price in the South was
just bail out Wall Street.”
down from a revised 10.9-month supply in July.
$176,500, which is 3.4 percent lower than
According to Freddie Mac, the national
Single-family home sales slipped 1.4 per-
average commitment rate for a 30-year, con-
cent to a seasonally adjusted annual rate of
Existing-home sales in the West fell 5.3 per-
ventional, fixed-rate mortgage rose to 6.48 per-
4.35 million in August from an upwardly
cent to an annual rate of 1.07 million in August,
cent in August from 6.43 percent in July; the
revised pace of 4.41 million in July, but are 9.6
but are 4.9 percent higher than August 2007.
rate was 6.57 percent in August 2007. However,
percent below the 4.81 million-unit level a year
The median price in the West was $251,600,
last week the 30-year fixed had dropped to 5.78
ago. The median existing single-family home
down 23.9 percent from a year ago. “The high-
percent.
price was $201,900 in August, down 9.7 percent
est concentration of foreclosures is in the West,
Lawrence Yun, NAR chief economist, said
August 2007.
from August 2007.
the recent drop in interest rates is an immedi-
Existing condominium
ate impact of recent government action.
and co-op sales dropped 8.2
“August sales reflect higher interest rates
percent to a seasonally ad-
before the government takeover of Freddie
justed annual rate of 560,000
Mac and Fannie Mae, and the sudden drop in
units in August from an
mortgage interest rates over the past couple
upwardly revised level of
weeks is improving housing affordability,” he
610,000 in July, and are 19.0
said. “With higher loan limits and a beefing up
percent below the 691,000-unit pace in August
which is weighing down the median price
of the FHA program, all the mechanisms have
2007. The median existing condo price4 was
because many buyers are taking advantage of
been falling into place to increase mortgage
$212,600 in August, which is 7.2 percent below
deeply discounted prices,” Yun said.
availability.
a year ago.
Congress needs to take care of Main Street and not just bail out Wall Street.
In the Northeast, existing-home sales
“However, home sales will be constrained
Regionally, existing-home sales in the
dropped 6.6 percent to an annual pace of
without a freer flow of credit into the mortgage
Midwest rose 0.9 percent in August to a pace of
850,000 in August, and are 15.0 percent below
market. The faster that happens, the sooner
1.14 million but are 12.3 percent below August
a year ago. The median price in the Northeast
we’ll see a broad stabilization in home prices
2007. The median price in the Midwest was
was $271,000, down 3.8 percent from August
that in turn will help the economy recover,” Yun
$168,000, down 5.6 percent from a year ago.
2007.
are
said. “Historically, housing has led the nation out of economic doldrums — there will not be an economic recovery without a housing recovery.” The national median existing-home price2 for all housing types was $203,100 in August, down 9.5 percent from a year ago when the median was $224,400. “The median home price reflects more transactions related to subprime loans,” Yun said. “Fewer than 10 percent of homeowners have subprime loans, but these mortgages are accounting for a disproportionately high share
1 The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample — nearly 40 percent of multiple listing service data each month — and typically are not subject to large prior-month revisions. 2 The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the geographic composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.
hand, areas that have had sharp price cuts are
3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982. Condos were tracked quarterly prior to 1999 when single-family homes accounted for more than nine out of 10 purchases (e.g., condos were 9.5 percent of transactions in 1998, 8.5 percent in 1990 and only 6.1 percent in 1982).
seeing a turnaround in sales, which are rising
4
of sales in the current market. On the other
very fast now in parts of California, Florida and
Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.
Nevada.”
For more information: http://www.realtor.org/research/research/ehsdata
JANUARY / FEBRUARY 2009
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59
PARTNER UP The importance of real estate industry partnerships BY SANDY SEEKINS
PARTNERSHIP IMPORTANCE
In today’s uncertain economic times and
regain the momentum needed to create sus-
outreach including in-language post-purchase
tightened credit markets, it is proving increas-
tainable homeownership solutions. Fortunate-
counseling and loss mitigation services.
ingly difficult to navigate the complexities of
ly, a variety of real estate industry partnerships
the real estate and home-buying processes.
have formed to represent the interests of
4. Restoring the public’s trust and confidence
minority consumers.
via stricter regulations and professional stan-
For seasoned real estate professionals, new laws and emerging regulations require diligent
The Asian Real Estate Association of
dards to ensure homebuyers are treated fairly
research and a keen ability to interpret the fun-
America (AREAA), the National Association of
and to ensure sustainable homeownership for
damental provisions provided by various stim-
Real Estate Brokers (NAREB) and the National
all minority families. Restoring trust also calls
ulus and economic recovery packages. For
Association of Hispanic Real Estate Profession-
for supporting federal and state licensure and
potential homebuyers or strapped borrowers,
als (NAHREP) and Stewart Title’s Community
education standards for all mortgage profes-
many of whom could benefit from tax credits,
Forward, for example, make up a group of real
sionals that strike a fair and reasonable balance
deductions or foreclosure rescue, these pro-
estate practitioners whose collective purpose is
of responsibility between all lenders, mort-
grams often go unused or abandoned due to
to serve America’s minority and immigrant
gage professionals and consumers.
their obscure and confusing nature.
populations.
Minority and immigrant populations often
These four organizations represent more
5. Protecting the housing system and creating
experience even higher levels of anxiety
than 70,000 practitioners in the real estate
liquidity through regulatory oversight bills for
through the home-buying process. Minorities
industry and exert significant influence on real
GSEs to ensure market and public confidence in
have been disproportionately affected by the
estate transactions in the minority community.
these important housing institutions while
Specifically, these organizations work to-
expanding their capacity to meet their public
downturn in the housing industry due to the large number of recent first-time homeowners
gether to achieve a variety of goals including:
and the widespread use of subprime and Alt-A loans among minority communities. A great number of minority homeowners do not have sufficient equity or access to tradi-
mission. Protecting the housing system and creating liquidity also includes making FHA
1. Protecting homeownership through fore-
reform a reality and subjecting Wall Street firms
closure prevention funds and realistic loan
to increased regulatory oversight.
modifications and workouts.
tionally available mortgage products to help
The landscape of real estate in America has become increasing complex and challenging to
meet their mortgage and financial obligations.
2. Reversing declining markets policies to
navigate and unfortunately, minority and
Therefore, the foreclosure rate of subprime
ensure that low to moderate and minority com-
immigrant populations have been among the
loans has had a disproportionate impact on
munities are not unintentionally or dispropor-
hardest hit by unscrupulous and predatory
minorities and has placed many at great risk for
tionately affected by these policies. These poli-
lending practices. However, through the joint
losing their homes.
cies would also call for the creation of a second
efforts and commitment of real estate industry
mortgage fund to stimulate market demand
partnerships and associations, the interests of
and stability for homes in declining markets.
consumers have a new level of protection mak-
Never before has there been such a pressing need for collaboration among lawmakers, regulators, the housing industry and real estate practitioners to address the subprime crisis and
ing the dream of sustainable homeownership a 3. Increasing multicultural counseling and
are
reality.
Sandy Seekins is currently the Vice President Regional Director of Multicultural Markets for Stewart Title Guaranty. She has served the Real Estate Industry as Realtor, Lender and Sales Manager for more than 15 years. She has been with Stewart Title for 9 years successfully pursuing the company’s growth efforts in the Regional and National Communities as well as general sales markets. Seekins founded the Community Forward and EEH (Employers Empowering Homeownership) initiatives and Multicul-tural brands for Stewart Title. She is also very active in the AREAA, NAHREP, SAREAA, and LULAC organizations.
JANUARY / FEBRUARY 2009
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61
CONVENTION OVERVIEW
3rd Annual ASIAN AMERICAN REAL ESTATE CONVENTION & GALA
LOS ANGELES EVENT POINTS TO BUSINESS OPPORTUNITIES AND THE IMPORTANCE OF EDUCATION BY PRAVEEN SHARMA
T
he real estate industry is changing, much like the cultural landscape of the United States. At its third annual convention, the Asian Real Estate Association of America demonstrated how these changes, together, can have a positive impact on communities and the success of real estate professionals. The nation’s largest real estate organization representing the diverse Asian community brought together public officials, economists and industry experts who weighed in on factors that will affect the future of American real estate. The messages varied but the underlying theme was the same: the Asian American population, and the professionals that serve this community, can be a foundation of the housing market revival.
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As the second-fastest growing population in the United States, with the highest median household income and highest average home purchase price, Asian Americans represent a profitable business segment. Coupled with the fact that the Asian American homeownership rate is approximately 15 percent below that of nonHispanic whites, and this segment presents a major opportunity for real estate professionals looking to position themselves for future success. Presenters addressed how real estate industry professionals can take advantage of bankowned properties, innovative credit tools and the landmark Federal housing law to help increase business opportunities while at the same time decreasing the gap in homeownership
JANUARY / FEBRUARY 2009
rates. Notable speakers included Representative Maxine Waters, NAR Chief Economist Dr. Lawrence Yun and California State Controller John Chiang. Education for the Future The convention marked the installation of 2009 AREAA Chairman, Allen Chiang. A firm believer in the power of education, Chiang earned six NAR designations in less than one year. He reiterated his commitment to education during his inaugural speech as the association’s chief director: “Over the next year, I am eager to increase educational opportunities for AREAA members and consumers, because I believe education is critical to our individual success and to the success of our homebuyers,” he said. “AREAA must play an im-
CONVENTION OVERVIEW
Top left: Walt McDonald, past president of NAR installs Allen Chiang Top right: AREAA Washington State Chapter President Jason Watabe (Left) with AREAA Vice-Chair, John Fukuda (Right) Far left: AREAA Treasurer Rob Mehta, AREAA Board Member Fred Underwood, Ed Lawler and Victor Raymos Left: Allen Chiang and John Chiang, California State Controller.
Upper left: Glenda Gabriel, Neighborhood Lending Executive at Bank of America, addresses the role of real estate professionals in the housing recovery Above: John Fukuda, AREAA Chair-Elect, Jim Park, Allen Chiang, John Chiang, California State Controller, Edward Koo, Convention Chair and AREAA Board Member Left: Allen Chiang shares a dance with his wife, Sophie
JANUARY / FEBRUARY 2009
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63
CONVENTION OVERVIEW
Top: Allen Okamoto, former Chair, Emily Moerdomo Fu, Immediate Past Chair and Allen Chiang Above: Allen Chiang and Winnie Chow Davis, AREAA Board member Bottom left: Chris Um, Edward Koo (Convention Chair), Audrey Tsang, Yangsook Ku, Steve Han Bottom right: AREAA Secretary Kathy Tsao, AREAA Founding Chairman John Yen Wong, Betty Sun Wong and Janice Ang
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portant role in educating consumers in the area of financial literacy, especially our younger generation, so that we can guard against the devastating impact of any future downturns in the market.” AREAA also launched a new class at this year’s convention. Taught as an interactive, scenario-driven course, Avoiding Legal Disputes When Working with Asian American and Other Immigrant Homebuyers is the second of three courses in AREAA’s Professional Development Series. Class attendees learn the basics of working with clients of cultural backgrounds different from their own, without exposing their business to legal troubles throughout the transaction process, from obtaining a listing to closing the sale. Avoiding Legal Disputes… was developed and presented as a partnership between AREAA and Bank of America. In Recognition Though unannounced, Allen M. Okamoto’s Real Estate Person of the Year Award should have come as no surprise. As past chair and one of the founding directors of AREAA, Okamoto has shown an unmatched dedi-
cation and commitment to minority homeownership throughout his career, working to elevate Asian Americans to national prominence in the industry. Among his notable accomplishments, Okamoto was the first Asian president of the San Francisco Association of Realtors and was also named one of the 25 Most Influential Thought Leaders by the National Association of Realtors in 2006. In light of their extraordinary efforts to reach and serve the Asian American housing market, AREAA presented awards to four of its industry partners as well. The recipient of the Corporate Partner Award was Bank of America for its broad support of all AREAA initiatives, including chapter development and membership growth. Wells Fargo was recognized for Leadership in Education, leading AREAA’s efforts to educate more practitioners on the use of FHAinsured products. Stewart Title received the Leadership Award for pursuing programs that will increase fair and equitable housing in Asian and immigrant markets, including the joint initiative with AREAA to provide members with translated closing documents in Chinese, Vietnamese and Korean. Finally,
JANUARY / FEBRUARY 2009
Genworth Financial was selected for the 2008 Innovation Award for maintaining its commitment to product development while the market faces an overall withdrawal of new financing tools. Genworth worked with AREAA throughout the year to ensure the voice of the Asian real estate professionals was heard during its product development process. Expanding Networks As is always the case at AREAA events, plenty of time was built into the program for attendees to meet people and grow their personal networks. The welcome reception, expo hall and gala dinner provided a number of occasions to socialize, learn from peers and meet like-minded individuals. The convention wrapped up with a property tour of new developments in Los Angeles. The tour introduced convention goers to new developments in Los Angeles including the Century, the Summit on Sixth, Solair Wilshire and the RitzCarlton residences in LA Live. AREAA will host its next major education and networking event at its East Coast convention on March 13-14, 2009 at the Ritz-Carlton in Washington, D.C.
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