Chinese homebuyers flood LA suburb with big homes

Bloomberg examines an influx of large-home purchases by Chinese buyers in Arcadia, California:

A year ago the property would have gone for $1.3 million, but Arcadia is booming. Residents have become used to postcards offering immediate, all-cash deals for their property and watching as 8,000-square-foot homes go up next door to their modest split levels. For buyers from mainland China, Arcadia offers excellent schools, large lots with lenient building codes, and a place to park their money beyond the reach of the Chinese government.

The city, population 57,600, projects that about 150 older homes—53 percent more than normal—will be torn down this year and replaced with mansions. The deals happen fast and are rarely listed publicly. Often, the first indication that a megahouse is coming next door is when the lawn turns brown. That means the neighbor has stopped watering and green construction netting is about to go up.

This flood of money, arriving from China despite strict currency controls, has helped the city build a $20 million high school performing arts center and the local Mercedes dealership expand. “Thank God for them coming over here,” says Peggy Fong Chen, a broker in Arcadia for many years. “They saved our recession.” The new residents are from China’s rising millionaire class—entrepreneurs who’ve made fortunes building railroads in Tibet, converting bioenergy in Beijing, and developing real estate in Chongqing. One co-owner of a $6.5 million house is a 19-year-old college student, the daughter of the chief executive of a company the state controls.

Arcadia is a concentrated version of what’s happening across the U.S. The Hurun Report, a magazine in Shanghai about China’s wealthy elite, estimates that almost two-thirds of the country’s millionaires have already emigrated or plan to do so. They’re scooping up homes from Seattle to New York, buying luxury goods on Fifth Avenue, and paying full freight to send their kids to U.S. colleges. Chinese nationals hold roughly $660 billion in personal wealth offshore, according to Boston Consulting Group, and the National Association of Realtors says $22 billion of that was spent in the past year acquiring U.S. homes. Arcadia has become a hotbed of the buying binge in the past several years, and long-standing residents are torn—giddy at the rising property values but worried about how they’re transforming their town. And they’re increasingly nervous about what would happen to the local economy if the deluge of Chinese cash were to end.

Interesting look at how this affects one particular community. It seems to bring together several issues that might trouble the average American suburbanite:

1. An influx of immigrants. This is happening across the suburbs as many new immigrants move directly to the suburbs. At the same time, there are a number of ethnoburbs in the LA region so this is not unknown.

2. An influx of immigrants from China. The United States has an interesting current relationship with China and Americans didn’t treat Chinese immigrants well in early California. A large group of wealthy foreigners from a country with a huge economy and shadowy government might make some nervous.

3. This big money means older homes are being torn down and replaced with big houses. A large number of teardowns in an established community tends to attract attention as the homes can change the character of neighborhoods as well as raise prices (though this is also presented positively in this story as long-time residents can cash out).

All together, this rapid change will be worth watching.

Chinese purchase “monster homes” in New Zealand

McMansion type homes are not just restricted to the United States. This article describes what Chinese buyers are moving into in New Zealand:

When veteran architect Ron Sang drives around the outer fringes of Auckland near Albany or Botany, he can always spot a house built for a Chinese buyer.

“Generally it has a high portico on the outside – a big, high, ostentatious-looking porch, usually double height,” he says.

“Generally above the door you have a window and through the window you can see chandeliers. Inside the door you’ll see a big, ostentatiously curved stairway. They like to show wealth.”

These grand mansions on small suburban sections – what sociologist Paul Spoonley, adopting a Canadian term, calls “monster houses” – have become the stereotypical Chinese footprints in our cityscape.

While the homes described here are called “monster homes,” this sounds very similar to what Americans would call McMansions with the traits of a big entryway, garish appointments, the goal of impressing a buyer or visitor, and large homes on relatively small lots in suburban neighborhoods.

There is an interesting discussion later in the article about Chinese immigration to and residential patterns of Chinese residents in New Zealand.