Arcadia Housing Boom with Chinese dollars?
A Recent report wants you to believe Arcadia officials are getting kickbacks and that China is bringing boatloads of cash into the community of homes – we try and separate fact from fiction
By Terry Miller
“ 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, “ according to a report the Bloomberg Report published Oct 15.
The report says…“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 also known as a McMansion 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.”
According to Jason Kruckeberg of the city of Arcadia “July 1, 2013 through June 30, 2014 it looks like there were 167 residential building permits issued. In terms of tear downs in this calendar year, we are probably going to have between 150-160. “
What the Bloomberg report fails to say is that not all of those permits are for mansions, but it certainly does suggest this might be the case.
According to this report, “a 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.
Bloomberg Business Week published an article Oct. 15, describing Arcadia as a real estate boom specifically geared for Chinese investment.
Mayor Pro Tem Gary Kovacic said at the Oct. 21 City Council meeting that the story was both full of factual errors and a great deal of innuendo.
• The report inaccurately states: “Arcadia has no real downtown, only low-rise commercial stretches lined with real estate offices and boba tea shops; Din Tai Fung is the closest thing there is to a central hub.”
Kovacic said that while he likes the dumpling house, he is unaware of anyone who would consider the restaurant and general area a central hub of Arcadia. And when the reference to Bridal shops came up….Kovacic pointed Bloomberg’s uninformed author to “another city” presumably referring to Temple City which is well known for its plethora of Bridal shops on Las Tunas…much like the original in Taipei City, Taiwan which I personally visited 2 weeks ago. All are genuine businesses and not massage parlors of questionable repute as is insinuated in Bloomberg Business Week.
“For almost a century after its founding in 1903, Arcadia was white and conservative. In the late 1930’s more than 90 percent of the city’s property owners signed agreements, circulated by the Chamber of Commerce, to sell only to white buyers. Its Santa Anita racetrack held about 19,000 Japanese Americans as they were relocated to internment camps during World War II. In the early 1980s an influx of immigrants from Taiwan arrived, drawn in large part to the great public schools. A second wave came from Hong Kong after the 1989 Tiananmen Square protests. The city’s Asian population grew from 4 percent in 1980 to 59 percent in 20 10. There were tensions at first—a letter in a local newspaper praised a proposed ban on non-English storefronts, writing, “Please leave your Asian signs in the old country and get Americanized.” Over time, the new residents got involved in civic life, joining the Rotary Club, entering local government, and opening businesses such as Din Tai Fung Dumpling House, a Taiwanese restaurant tucked in the corner of a strip mall.
We asked Scott Hettrick, Executive Director of Arcadia of Commerce to comment on the above rather disturbing statement made by Bloomberg:
“Sadly, there is one reference to this that I know of — in 1950s book about Arcadia by Gordon Eberly, a former hardware store owner in the 1920s for several decades.
Can’t independently verify if that is true or not in our Chamber archives that do not go that deep into recording such initiatives 80 years ago.
If it is true, it is certainly sad and unfortunate. It would also not be surprising, given the era — this would have been nearly a decade before the federal government rounded up American citizens of Japanese descent and even housed some of them against their will right here in Arcadia at Santa Anita Park race track – another brief period of our history for which we are embarrassed to be associated. This reference to the 1930s was still only one generation after the Civil War and three decades before the civil rights movement began in this country. Jim Crow laws of racial segregation were still very much enforced in too many places in this country well into the 1960s.
There are a lot of out-of-date policies, laws, rules, and initiatives that organizations, cities, and countries look back on decades later and cringe — clubs that once refused to allow membership based on race, religion, and even women. Many religions, golf courses, and venerable organizations like the Boy Scouts have, in some cases, only in recent decades lifted restrictions that now seem very incomprehensible. And some are still on the books in this 21st century.
None of us who make up the current 93 year-old Arcadia Chamber of Commerce knew the board members or business owners in the 1930s, but we strive to administer policies and practices that are not only reflective of today’s society but that will also be something that our successors in future generations can look back on with pride.
We can only do our best in the time we live to keep our minds open and diligently avoid creating any laws, ordinances, rules, or policies aimed in any way at a specific religion or ethnicity that restrict anyone’s ability or right to live as free American citizens without any limit to one’s liberties,” Scott Hettrick, Arcadia Chamber of Commerce
Henry Nunez, an Arcadia real estate agent apparently met with so many homebuyers from China that he bought a Mandarin-English translation app for his phone, according to a report published in June.
The $1.99 purchase apparently paid off in May, when he sold a five-bedroom home with crystal chandeliers, marble floors and two kitchens, one designed for smoky wok cooking. The buyers were a Chinese couple who paid $3.5 million “in cash.”
Buyers from Greater China, including people from Hong Kong and Taiwan, spent $22 billion on U.S. homes in the year through March, up 72 percent from the same period in 2013 and more than any other nationality, the National Association of Realtors said yesterday in its annual report on foreign home purchases. That’s 24 cents of every dollar spent by international homebuyers, according to the survey of 3,547 real estate agents.
Chinese buyers paid a median of $523,148 per transaction, compared with a U.S. median price of $199,575 for existing-home sales. While Canadians bought more houses than the Chinese, they spent less — a median of $212,500 per residence, for a total of $13.8 billion.
Chinese bought 32 percent of homes sold to foreign buyers in the state, double the share sold to Canadians, according to an April survey by the California Association of Realtors. About 70 percent of international buyers pay cash, the survey showed.
Buyers from China are driving up prices and fueling new construction in Southern California areas such as Arcadia, a city of about 57,500 people with top-rated schools, a large Chinese immigrant community and an array of Chinese restaurants and markets.
The median home price in Arcadia’s 91006 ZIP code was $1.28 million in May, up 18.5 percent from a year earlier, according to research firm DataQuick.
We asked Andrew Cooper from the Arcadia Association of Realtors to comment on the story.
“While I find the article to be an interesting read from a “behind-the-scenes” standpoint of new home construction in Arcadia, the [Bloomberg] article is riddled with factual errors, inaccuracies and blatant exaggerations. The first example can be found in the opening few paragraphs of the article no less. Raleigh Ornelas is not a broker located within the city of Arcadia. The fact that he’s located outside of Arcadia yet conducts business here, to me, is more compelling reading but the author missed that part. Clearly this is not an error on Mr. Ornelas’ part, it is, however, a prime example of some of the inaccuracies made by the author perhaps in an effort to make for a more controversial story.
To illustrate this, a huge mistake in the article is the statement that foreign money from China has helped the city build the Performing Arts Center. The Performing Arts Center was built through a bond voted on and approved by the residents of Arcadia. For that matter, the Mercedes dealership expansion under construction is privately financed by the Rusnak family, I believe, not through foreign money as the article states.
The author made a reference about “strange rumors” within the city. I find printing rumors without proper investigation to be sensational journalism. As a businessman in Arcadia and one who is civically involved as a volunteer within the city in various aspects I can state that I have not heard of anything even closely resembling the rumors as printed in the article.
This trend of foreign investors buying in CA is certainly not limited to Arcadia. Other Southland cities like Irvine, Walnut, and San Jose, to name a few, are other areas that are attracting foreign money, not to mention other areas of the United States.” Andrew Cooper, Chief Executive Officer, CIPS
Arcadia Association of REALTORS®.