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Asian buyers buoy demand for new homes in California
By Juwai, 16 March 2012
Home sales in Orange County, California, are being driven up by Asian buyers who are lured by lower prices following the housing price collapse and proximity to Asian communities. Jonathan Alcorn / Bloomberg
Connie Wang paid about $960,000 last June for a new four-bedroom, four-bath house in a sprawling swath of Southern California that's home to Disneyland and Pimco. Now she may buy a second as an investment. China Daily reports.
March 15, 2012
-- "You know why Orange County is doing better?" said Wang, who splits her time between Shenzhen in southern China, where she oversees a toy-manufacturing business, and Irvine, California, where she raised her three children. "It's because all my neighbors are from China and they all bought their homes in cash."
Demand for newly built houses is rising in Irvine and surrounding cities, an affluent region south of Los Angeles whose employers include Walt Disney Co, fund manager Pacific Investment Management Co and technology companies Broadcom Corp and Western Digital Corp.
Orange County home sales are being driven up by Asian buyers who are lured by lower prices following the housing collapse and proximity to Chinese, Vietnamese and Korean communities.
In the county, situated along 68 kilometers of Pacific coastline, 2,572 homes sold in December, double the number in the January 2008 trough and more than the 93 percent increase across Southern California, according to DataQuick, a San Diego-based provider of property information.
The increase in January, the latest month for which figures are available, was 46 percent in Orange County and 45 percent throughout Southern California.
Orange County is a rare region where new-home purchases are increasing. Sales of newly constructed homes rose to 80 properties in January, up 63 percent from a post-peak low in February 2009, according to DataQuick. That compares with 1,417 nationwide, a 23 percent decline, and 669 in California, down 21 percent and the lowest in a decade.
Demand has kept property values from declining as much in Orange County as in other regions. The median home price was $392,000 in January, down 39 percent from the June 2007 peak. That's less than the 49 percent decline across Southern California and the 51 percent slump nationwide, DataQuick said.
"In Asian-focused communities, prices have held up phenomenally well," said Eric Sussman, a senior lecturer at the Ziman Center for Real Estate at the University of California, Los Angeles.
"Culturally speaking, Asians tend to have a much longer-term view than Americans do. They look at real estate as multi-generational, not short-term focused. That's why they are making purchases during times when others may shy away," he said.
Asian buyers have helped increase home sales in other parts of North America as well. Interest in investment opportunities and second homes from buyers from China has boosted purchases in Vancouver, Seattle, California's Silicon Valley and Hawaii.
Mei Zhou, 50, said she and her husband decided to buy a $1.2 million house in Irvine last May because it was a "good deal" for a long-term investment.
"We didn't think of moving, but then I thought it's a buyer's market," said Zhou, who is originally from Shanghai and moved to California 20 years ago. "I definitely think I got a better deal than I would have a few years ago. Back in 2005, I think this house would have cost at least $1.4 million."
New Home Co opened Carmel at Woodbury, the Irvine development where Wang bought her house, in February 2010.
The Aliso Viejo, California-based builder sold its last two homes at its Four Quartets neighborhood last month, bringing sales in the village of Woodbury to 124 in the past two years, according to Joan Marcus-Colvin, New Home's vice-president of sales, marketing and design. About 75 percent of the buyers were of Asian descent, she said.
At Brandywine Homes' Pomelo development in Garden Grove, California, 20 single-family homes priced from $499,000 to $550,000 sold between March and December of last year, according to Dave Barisic, vice-president of sales and marketing at Irvine-based Brandywine Homes. About 90 percent of buyers are of Asian descent, he said.
The rate of home sales has risen to about four a month, twice last year's pace, Barisic said. At the company's Century Village development in Garden Grove, which opened on Jan 14, nine properties have sold so far.
"For our buyer profile, buying a new home is just as much an investment, like a mutual fund, as it is a lifestyle and a place to live," Barisic said.
Demand from Asian buyers has been specific to pockets in Orange County, while a broader, lasting recovery in Southern California is dependent on an economic rebound, said Sussman, the UCLA professor.
Bloomberg News in Los Angeles