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This article gets filed under the "FCB" folder (FCB = Foreign Cash Buyer), ehehhe.
Chinaâ€™s new rich set trend buying luxury homes in California with cash
May 17th, 2010 by Key | Posted in News | 33 Comments Â» From World Journal, Los Angeles:
Mr. Chen had been renting and living in a 2 bedroom house in South Pasadena, California for many years, recently he was forced to move because his landlord sold the house for 525,000 dollars (short sale). Friends from mainland China asked him why, he always responded angrily, â€œAll you mainlanders are too rich, buying houses with cash, causing me to move!â€�
As Chinaâ€™s economy rises, a group of Chinaâ€™s new rich with abundant cash funds appeared in Southern California, mostly businessmen, taking advantage of the housing market downturn bought a lot of foreclosures, short sales or not yet listed houses with cash.
Chinaâ€™s new rich like to live in cities with good school district, housing price with the potential of increase and more Chinese dominated areas, such as Diamond Bar the Country communities, Walnut, Arcadia, San Marino, Irvine and other places. The even richer tend to live in the white communities. In coastal Orange County, Newport Beach and Newport Coast are the most popular. Industry rumors said, many mainland Chinaâ€™s corrupted officials and illegal immigrants are mixed in this group of the new rich, began to shift into these luxury residential areas and bought multi-million dollar homes with cash to avoid being noticed.
Real Estate agent Zhou Min pointed out that she began seeing mainland Chinese purchasing homes in the 1990s. At the time, a community in Roland Heights had many buyers from Dalian and Shenyang, they appointed a Middle Eastern lawyer whose wife is from Shenyang to handle their â€œinvestment immigrationsâ€�, said they can get green card as long as they buy a 300,000 dollar house.
Although these mainland Chinese later found out that they were taken in, this trend made many mainland Chinese move into the new houses in the community. Living in a gated community in Roland Heights, Taiwanese immigrant Ms. Li said, the residential community she lives in was even numerously called â€œErnai villageâ€� (â€œsecond wives villageâ€� or â€œmistress villageâ€�) by the Mainland Chinese media, because many home owners are wealthy businessmen from China who kept their mistresses there.
Zhou Min said the mainland Chinese in the end of the 90s purchased in the newly built condominiums near Arcadia Ranch market, they are less than 300,000 dollars, and are convenient for the Chinese lifestyles.
But the recent home buyers from China - from Beijing, Shanghai, Nanjing, Chongqing, Dalian and so on, are all business tycoons, they all purchase over 1 million dollar homes, and also pay for them with one all cash lump-sum payment, mainly in Arcadia, San Marino and Diamond Bar etc. places.
â€œOnce a customer produced the proof of bank account, took a look, it had 6 million dollars, everyone was shocked.â€� And the wealthier mainland Chinese buyers like to buy in white areas, Newport Beach and Newport Coast are their first choices.
As for wealthy mainland Chinese businessmen moving into Pacific Coast white communities, real estate broker Liu Zhaojun said mainland China has foreign exchange controls, rich businessmen do not want to be too ostentatious and be noticed.
Real estate agent Li Caiyi said, the number of wealthy mainland Chinese businessmen buying homes in Newport Beach and Newport Coast area is increasing, even white real estate brokers know their buying potential and taking initiatives in approaching them and showing them houses.
Mainland Chinese like to buy homes with cash, prefer single family homes priced at around 2 million dollars. They know the U. S. housing market, and communicate with their fellows in their home town. Only purchase when they determine the house value has potential to increase, they do not just buy anything. Some customers said, not only in Southern California, they are also purchasing in Northern California, looking for investment opportunities. From the interactions you can hear that they are mostly businessmen from northern China, some of their children are studying in the U. S. so they hope to buy a house for their children to settle.
Fengzhu Yue who lived in Newport for years said in the past Chinese who buy houses around here are all from Taiwan, in the recent years they are all from China.
Often traveling to China and Taiwan, she said it is not surprising because there are more and more wealthy mainland Chinese people. However no matter if they are from Taiwan or China, everyone is very low key, yet to see mainstream community rebounding
This explains the uptick in house prices. Those at the upper end of the market are being purchased by Mainlanders who have a fetish for all assets US-based.
This should come as no surprise to anyone that The Chinese are going to buy up America. Should the US dollar ever fall relative to the CNY, and it could go as low as 1.75:1.00 in the worst case, then the country will be owned by China. Get used to it.
Those neighborhoods mentioned in the article have always been considered "asian" neighborhoods on the west coast at least dating back to the 60's. It's a smart move by the upper middle class and rich though. U.S. houses are comparably cheap and a far better investment than what you can find in China especially after the big blood bath we've seen in prices they are getting in on the bottom floor.
You're right that allowing the Yuan to float might actually be highly beneficial to the Chinese government. It will impact exports a bit but they can use massive dollar surplus accounts to go on an asset buying spree with their new found purchasing power as well.
As it is the biggest foreign landlord in the U.S. is the U.K.