PA real estate agents - selling out PA to the highest bidder Palo Alto Issues, posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Jan 7, 2013 at 10:27 am
Just want to throw out a question to the community: do you think the ever-growing phenomenon of Palo Alto homes being bought by international buyers - many (most?) of which are absentee landlords - is good or bad for Palo Alto overall?
I don't have financial skin in the game (I rent), but grew up here & live here still. Likewise, I'm married to a foreigner myself (who's since become a citizen), so live right on the middle ground between PA and rest-of-world.
I'm sure some will attack me for bringing up a potentially divisive topic, but in the interest of moderation, I do think it's helpful for us to discuss this. By contrast, many countries where PA buyers come from have laws preventing foreigners from owning, so at the very least we can say that this is a strategic topic.
Posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Jan 7, 2013 at 1:44 pm
1. Here's an Aug 2012 article with national and state data, including the datapoint that "Foreign nationals accounted for $82.5 billion, or 8.9%, of the $928 billion spent on U.S. residential real estate from April 2011 through March 2012, according a June survey from the National Association of Realtors. That was up 24% from $66.4 billion the previous year. More than 50% of sales over the past year occurred in just five states: Florida, California, Texas, Arizona and New York." Web Link
2. Qualitatively, this Dec 2012 article on the Silicon Valley Association of Realtors recent hosting of a Chinese government delegation means SVAR understands and welcomes (depends on?) the trend. Web Link
3. This 1/4/13 article interviewing Bay Area real estate agents includes the quote from Amy Sung of DeLeon Realty in Palo Alto: ""The foreign investors are bringing the competition to another level. We have people who are already here who have come here to study and then they stay. And then we have people in the new rich, who come here with a visitor's visa or investor's visa. And there are the really high-end buyers who come here for a weekend, identify properties and then go home." 'Thirty to 40 percent of all the offers are cash, Sung said. "They're buying investment properties, pretty much everything that comes to the market."'
Also this excerpt from the article:
Jennifer Tasto, a broker at Property Services in Burlingame, said she has done $5 million in cash transactions in the past 12 months with Chinese buyers, becoming an expert in global money transfers along the way. One client is buying a home for her children even though they're still in elementary school. Tasto said she lost one bidding war for a Palo Alto home even though her client offered $390,000 over asking price.
She said one of her clients explained that his aim is to hold a piece of real property in a country where there is solid law and protection for property rights.
"I'm finding that in a lot of Asian countries, not just China, people cannot own land," Tasto said. "They are buying a land lease. Here, when you buy real estate, you buy the dirt."
Posted by nanny state, a resident of the Midtown neighborhood, on Jan 7, 2013 at 3:00 pm
The Sale of the property is a private transaction between two or more individuals. It is not anyone's business or are we suggesting that the Nanny State of Palo Alto start regulating property sales????
Posted by Anonymous, a resident of the Barron Park neighborhood, on Jan 7, 2013 at 3:11 pm
Read the front page of the Sunday SJ Merc. Big article about foreign investors, mostly Chinese, who think our real estate is cheap, pay cash, and keep the prices artificially high. Some never live in them, or rent them out, they are just investments to sit on. It has made it very hard for US citizens to buy anywhere, because we cannot outbid a cash buyer.
Posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Jan 7, 2013 at 3:19 pm
@ resident - my concern with absentee foreign landlords is on multiple levels:
1. Oftentimes they literally leave the house empty, robbing those in the neighborhood of the ability to have neighbors. I count two on my 20-home cul-de-sac. From that point of view, do PA residents care whether homes are occupied or not? I do, especially when it lowers the sense of community. In many cases they are both landlord and tenant, but only fulfill the role of home owner.
2. *Generally*, I find that foreigners who buy PA homes with shorter-term motivations (wealth-preservation, high school, etc) are much less involved in the community.
3. One friend in the real estate industry has told me in no uncertain terms that much of the foreign money coming into PA homes is illicit (at least from the perspective of their home govt), with wealthy party members hiding wealth in the same way Americans do in the Cayman Islands, or Europeans in Switzerland. Is it OK to do that with the homes that make up our community?
Posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Jan 7, 2013 at 3:22 pm
@nanny state - I'm not saying I know the truth of the matter, just that I do think it's a subject worth some community conversation. Like I said, many of us know of multiple homes in our neighborhoods that are owned by foreign buyers and kept *uninhabited* for long stretches of time. It's almost the flip side of all the empty foreclosed homes in the Central Valley.
I have no affiliation with the state, and am just an individual trying to bring what I think is a worthwhile discussion to bear.
Posted by Nanny state, a resident of the Midtown neighborhood, on Jan 7, 2013 at 3:29 pm
Chris regarding your comments:
1) Is the "ability to have neighbors" something that people in PA expect??? Should a property only be allowed to be sold if the person actually moves in?? Sorry, I do not think having neighbors is some sort of requirement.
2) And so what? is it any of your business how involved in the community a property owner is? Is that something that PA should mandate???? Should PA have a requirement that any homes sold to "foreigners" have the finances investigated before the sale is completed, in order to satisfy you?
3) WEll, Chris, that is really a stretch--your real estate buddy told you that most of the money is illicit?? Care to provide actual proof???
Bottom line--this topic is not something that should be a part of a "community converstaion" since the sale of these homes is a private transaction and is no way the business of anyone.
I know that PA loves to regulate everything and anything, but they need to stay out of this matter and you need to find a real important topic to interest you.
Posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Jan 7, 2013 at 4:06 pm
@ Nanny - kindly chill a bit. As I said, I'm not the state, have no affiliation with govt, nor am I saying a single thing about any possible roll for local, state or fed govt in this matter. I am trying to start a conversation among people in my community. If you are against a conversation, well, then who's the nanny? #;^)
Posted by Not an issue, a resident of the Community Center neighborhood, on Jan 7, 2013 at 4:57 pm
Nanny state is correct- this is a non- issue, since it deals with private matters, that Chris and others have no business getting involved in. Not sure why Chris even raised this issue, besides trying to stir the pot on a faux issue. So, Chris, what exactly are you trying to " start a conversation" on. Interesting how Chris wants someone else " to chill" when they question his comments. If you cannot take the heat....
I would like to know the name of his real estate buddy. In fact, the authorities might be interested as well, though I doubt his claims are true.
Posted by Crescent Park Dad, a resident of the Crescent Park neighborhood, on Jan 7, 2013 at 4:57 pm
We have a house across the street that was purchased for the sole purpose of allowing the family's children to (legally) attend Paly. They live in the house Monday evening through Friday morning and then go to the other house for the remaining days of the week. Though there are some weeks during the school year that they don't bother.
Posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Jan 7, 2013 at 5:52 pm
To those who think this is a non-issue, I ask the following:
a. Is there a certain number of homes (as % of total in PA) that would need to be bought by people owners who neither live in them nor rent them for it to become an issue? 1%, 5%, 10%, 25%? What's your number? For me, the number's very low. Do I want my kids growing up with vacant homes all around, with homes populated by kids whose parents aren't even there & whose sole reason is to attend our schools?
b. As pertains buyers of PA real estate, do you really *only* care about maximizing [your] home values? Really?
c. @ Peter Carpenter - thanks for the 'rentier' viewpoint, but I don't see the impact on the rental market as the only prism through which the community might evaluate this strange real estate activity.
Many, many people are thinking what I'm thinking, and I've not yet met a long-time Palo Altan who *doesn't* think this foreign, absentee landlord (or the scenario Crescent Park Dad described) is both strange & concerning. If you want to pile on my for bringing up a topic for discussion that bothers you, please do so, but not for purely self-interested economic reasons.
Let's talk about this, people! Are we as a community fine with our neighborhoods being transformed, home by home, into a future Palo Alto where:
- many homes are permanently not occupied
- good numbers of homes are used specifically as non-family dwellings so out-of-country students can use our schools?
The Palo Alto I grew up in was a great place to live & raise kids. It still is, but looking 3/5/7 years into the future, this activity may actually *harm* home values if enough locals like me decide it's not what we want.
Posted by Aaron, a resident of the Palo Alto Hills neighborhood, on Jan 7, 2013 at 6:05 pm
This is the old Yellow Peril bigotry. If non-Asian Americans want to get back in the game, over the next few generations, they will need to get over their own weaknesses. How many non-Asian tiger moms are out there?
I am a white man, fully supportive of the Asian work ethic. I fully support the Asian's ability to freely bid on private properties in America. I wish them well.
The complainers need to look into their own mirrors, and question why they are not developing the work ethic, among their own children, to provide for a future that works. For example, how many non-Asian kids are winning the science fair prizes?
Posted by Not an issue, a resident of the Community Center neighborhood, on Jan 7, 2013 at 6:08 pm
As I said, this is a non-issue. It is none Chris' business what percent of homes are owned by "foreignors" and not lived in. These are private transactions between individuals-- non of Chris' business. Sounds like Chris and his long time PA resident buddies are suffering from a bit of xenophobia. How d o they know if the owners of these homes are " foreigners"? Peter makes a good point about taxes and if the homes are empty, then less children in our schools (school overcrowding is always a major complaint here).
Chris should come out and tell us what he wants --- mandatory screening by the city and/or a committee headed by Chris of all potential home buyers in the city, so that "foreigners" can be excluded? Or "foreign" buyers having ,to prove that the money they are using is not "illicit"?. Or how about having potential "foreign" owners meet with Chris et al and explain I detail what they plan to do with the house--- the Zaharias committee would then have the authority to approve or deny the sale--the free market and private property rights be damned.
This is a matter the city and individulas should stay out of.
Posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Jan 7, 2013 at 6:16 pm
Aaron & PA Hills, I dare say you are *not* very civic-minded. If you honestly cannot fathom how one could take issue with homes being bought by people from another country who don't even live in or rent the homes, then you have no vision. If this were happening because of people from Idaho doing the buying, I would say the same thing. It's about community, and it's about people living here, truly as members of the community. You should try it.
Posted by Not an issue, a resident of the Community Center neighborhood, on Jan 7, 2013 at 6:31 pm
Okay, Chris, enough rhetoric-- tell us how you plan to "address" the problem, though I am not sure that "civic minded" means snooping into other peoples business and trying to exclude foreigners and demanding that only local people be allowed to purchase property in town. We await your detailed plan.
Posted by What?, a member of the Jordan Middle School community, on Jan 7, 2013 at 7:42 pm
I'm third generation Chinese and grew up here in the 70-80s amongst Caucasians and was treated well by fellow Palo Altans. But now, I feel the resentment of WASPs because of the Chinese immigrant takeover. My family attended a sports party full of WASPs in Woodside and were completely ignored. We tried talking to people but ended up playing video games after being shunned. As soon as the awards were distributed, we left in a hurry.
It is unfair to assume that because I am Chinese, I am an immigrant and you have nothing in common with me. I dress well, speak perfect English, participate in schools and know my neighbors. I have friends of all ethnicities and Chinese immigrant friends too, who BTW, also fear the influx of Asian immigrants. Just because we all look alike to you, doesn't mean we want to be living in China - we want the diversity too. I actually have more in common with Caucasians than I do with Chinese immigrants. Thank God for the Jews and intelligent Caucasians in Palo Alto who treat us well and open their homes to us.
My suggestion to the resentfuls is to get off your tails and start working harder. It's no longer going to be the Old Boys Club where you get the job just because you fit the suit. And don't forget how the Chinese were abused while building the railroads. We kept working hard and have overcome it - we don't complain that we were abused and ask for empathy or turn to crime - we just work harder.
Posted by neighbor, a resident of Another Palo Alto neighborhood, on Jan 7, 2013 at 7:53 pm
While watching the tv show House Hunters International, I was annoyed to learn that foreigners -- us -- cannot buy real estate in at least some Asian countries. It's ok to have restrictive rules one way, I guess.
At the same time, I am symathetic with intelligent mainland Chinese who wish to get their money out of that country, it makes a lot of sense to anyone, UNLESS they are of the corrupt government types written up in the recent stunning New Yorker article - yikes.
Posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Jan 8, 2013 at 12:25 am Chris Zaharias is a member (registered user) of Palo Alto Online
First off, I for one think that this too is a good conversation, and certainly much better than the entire community staying silent. I hope we talk about things, remain civil, and respect differences.
Second, 's' speaks for him/herself, not me. @Not an issue - take note of that.
Third, as the son of a 1st-generation Greek immigrant who married a 1st-generation immigrant, I feel I've a right to not be called racist or xenophobic; you don't know me, but know I've sincerely said many times that I feel the real Americans *are* the immigrants. So know I'm raising the question with no malice towards *any* group. I have friends of all races & ethnicities, just as others do.
As poster 'what?' says, the Asian portion of this immigration is a complex issue for 1st, 2nd, 3rd & nth-generation Chinese immigrants. That, however, doesn't make it a discussion we can't have, does it? 'What?' - there's probably *some* truth to your resentfulness comment, but by the same token, PA is still a town where most wealth is Caucasian, so it's hard to paint people like me as resentful when we're doing pretty well as must be the case to live in PA.
One idea that perhaps we might all agree on: homes must not be unoccupied for more than a certain number of days out of the year, regardless of whether the occupant is a renter or owner. That would certainly solve the issue I have, which is that of diminishing neighborhood habitants.
Posted by Paly Alum, a resident of Another Palo Alto neighborhood, on Jan 8, 2013 at 11:55 am Paly Alum is a member (registered user) of Palo Alto Online
@Chris: I never called you "resentful" or "racist". I know of your family and know you are NOT. If you read my posting, you can infer which group I am calling "resentful". I am hoping Palo Alto stays diverse with intellectuals who can appreciate all cultures. I am not keen on Asian immigrants taking over our city since I grew up as an American. Truth is, living in America is more luxurious than living in Asia so I can understand the influx. I do see Chinese and East Indian immigrants assimilating in north Palo Alto. My Americanized Chinese friend was overflowed to a South Palo Alto elementary for a year and said there is less assimilation. Kudos to you for stating your real name.
Posted by big, a resident of the Crescent Park neighborhood, on Jan 8, 2013 at 7:32 pm big is a member (registered user) of Palo Alto Online
This is an issue that I am glad someone raised.
It is not about whether an immigrant group can assimilate. There is no such thing as complete assimilation. Any group just changes the community into which they immigrate, and at the same time is changed by that community. So Palo Alto will just become more Chinese. Its not something anyone can do anything about short of changing the investment laws. Nor should it be feared as the Chinese who are coming here came to get away from the Chinese regime with all the poor human rights record.
What is worrying is what this will do to our real estate market should the Chinese economy soften more. If these people do not have jobs locally, and have bought real estate to get their children through the Palo Alto schools and onto the UCs, a universal bargain in terms of an excellent education and all for the price of a house, this will only work if they can continue to pay the property taxes and if their business back in China does not fail - as many of them are now failing. Some of these people who have scraped together the money for the whole extended family may simply not be able to keep this up should the Chinese economy continue to slow. It is now at around 7 percent not the 10 percent of a few years ago. The Chinese govt is doing monetary infusions, but the demand is not yet there, and the massive building campaigns are slowing down. So if these people are related to development, it could be that in a few years they will either have to sell their Palo Alto houses or move into them and leave China. Either way the over inflated prices they have paid for them in the last couple of years are unsustainable in an economy which although robust by US standards because it is not flatlining, is not growing at the pace to absorb a huge influx of population who do not have the skills to be employed locally.
I think this discussion should be not about what is happening when the Chinese are buying up all the real estate, but what will happen if they stop and start to sell the Californian real estate. Chinas growth is not that even. These people are not immigrants. Their prosperity is tied to the Chinese economy not our own. If China hiccups then we will be back to 2008 or worse. It is not only possible but likely particularly as these people are not experienced in the free market economy and over bid against each other.
"I looked to buy a condo in SiliValley, where I live. I don't quite have enough cash to buy outright, but could make a nice down payment.
Unfortunately, there are a lot of investors with cash, out-of-town (ie. foreign) buyers that are snapping these places up before people like me (with excellent credit) can even make a bid on them.
They then fix them up, and flip them. This is driving the prices up too. They are the same crap-holy condos, but now they have granite counter tops and stainless steel appliances and sell for $50K more than they previously sold for, or are being rented out.
The rental market, in case anyone hasn't noticed, is screamin' hot right now, which is also driving up rents.
It just feels so false. There was a previous article that said foreign investors are just sinking cash into RE here, and not even planning to live in them, or rent them out. Wow, so there you have it, a reason for criminals to go in and set up a grow house, squatters to move in, and why all these neighborhoods are so 'barren' of life...as in, no sense of neighborhood anymore.
Not sure what to make of it all, but it is a bit unsettling, that's for sure."