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.
“You know why Orange County is doing better?” said Wang, a native of Taiwan 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 Taiwan, 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. (BRCM) and Western Digital Corp. (WDC) Orange County home sales are being driven up by Asian-born buyers who are lured by lower prices following the housing collapse and proximity to Chinese, Vietnamese and Korean communities. Homebuilders are adding features such as wok kitchens and feng shui layouts to some properties to cater to Asian buyers.
In the county, situated along 42 miles (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.
By the time Wang bought her property, prices had rebounded 20 percent from the post-peak low, in January 2009. That compares with a 15 percent increase across Southern California.
“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 multigenerational, not short-term focused. That’s why they are making purchases during times when others may shy away.”
Boom and Bust
Orange County, where Walt Disney built his first theme park and the teen television drama “The O.C.” took place, has close ties to the U.S. housing boom and bust. Firms including New Century Financial Corp. (NEW) and Ameriquest Mortgage Co., whose loose lending standards fueled the national real estate bubble, had their headquarters in the area before the subprime collapse.
The unemployment rate in Orange County was 8 percent in January, less than the 10.9 percent figure for all of California and 8.3 percent for the U.S., according to the state’s Employment Development Department. The median household income in the county, home to 3 million people, was $74,344 as of 2010, more than the $60,883 median statewide, according to U.S. Census Bureau data.
Seattle, Silicon Valley
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 Hong Kong and China has boosted purchases in Vancouver, Seattle, California’s Silicon Valley and Hawaii.
In Orange County, Mei Zhou, 50, said she and her husband decided to buy a four-bedroom, four-bathroom house in Irvine, 40 miles southeast of Los Angeles -- a $1.2 million purchase 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’s 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.
To accommodate the increase in demand from Asian buyers, closely held New Home is building dedicated wok kitchens at some homes at another of its developments, Lambert Ranch, in Irvine. The small room is adjacent to the standard kitchen, and has a stove and high-powered vent. Most of the properties also have separate living quarters for extended family, according to Marcus-Colvin.
“After our last focus group, we really wanted to accommodate these changing demands,” she said. “A lot of our Asian buyers have asked for these features and the feedback from those we’ve shown the new properties to has been, ‘You really listened to us.’”
Vietnamese, Korean Buyers
The percentage of Asians looking to acquire a home in the area with the help of Coldwell Banker rose to about 25 percent in the past six months from 10 percent at the peak of the market in 2006 and 2007, according to Steve High, a Newport Beach, California-based sales associate at the broker, which handles new and existing homes. A majority are originally from China, with others from Vietnam and Korea, he said.
Andrew Vu, who moved to Orange County from Vietnam with his parents 33 years ago, bought a two-story, four-bedroom house in Garden Grove, in June for $530,000. Vu -- who also owns two other homes, in Corona and Victorville, as investments -- said he appreciates the proximity to shopping areas and freeways offered by his new home, in Brandywine Homes’ Pomelo development.
Vu, 37, also said he enjoys being near Little Saigon in Westminster, which is dominated by local Vietnamese stores. Street signs are in both English and Vietnamese, and Asian-style archways mark the entrances to strip malls.
“I like the area and, over the long run, it’s an investment,” he said. “I think we reached the bottom, and it can only go up from here.”
Sales Rate Rise
At Pomelo, 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 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.
Asians made up the second-largest ethnic population in Orange County in 2010 at almost 18 percent, behind Hispanics, who accounted for 34 percent, according to the U.S. Census Bureau. California as a whole is 13 percent Asian.
Vu, who owns a local six-store retail chain, Warehouse Furniture Outlet, made sure his new house had a separate living area for extended visits from family and friends. Zhou, who owns a computer network consulting firm with her Taiwanese-born husband, also wanted her new home to have two master bedrooms -- one downstairs and one upstairs -- with their own bathrooms to accommodate any immobility that may come as the couple ages, as well as long-term visitors.
Standard Pacific Corp. (SPF), based in Irvine, has begun to cater to culturally specific preferences, including building wok kitchens and incorporating feng shui and numerology rules, such as leaving out unlucky numbers from street addresses, according to Ted McKibbin, president of the builder’s Southern California coastal division.
Under the Chinese system of feng shui, buildings are oriented in a favorable manner, often determined by the location of bodies of water, stars or compass directions.
“Good feng shui falls under good design principals, the way a cook top and sink are lined up with each other,” McKibbin said. “But with some buyers there’s more focus on that. That’s when things like numerology come into place, which can place challenges in regards to addressing a home and avoiding certain numbers. We do pay attention to that.”
Standard Pacific last month reported a fourth-quarter profit of $15.3 million, compared with a year-earlier loss of $21.9 million, helped by a 44 percent net increase of new orders to 615. The company opened its Castillian development at Blackstone in Brea, in northern Orange County, in mid-March and sold 31 of the project’s 38 units during the following nine months. The houses were priced at about $1 million each.
Smaller design adjustments may also include solid, easy-to- clean surfaces in the kitchen, porcelain floors and streamlined contemporary designs, according to New Home Co.’s Marcus-Colvin.
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.
“Everything is still incremental,” he said. “Until there’s a sustainable recovery in consumer confidence and employment and better availability of financing, the recovery in Southern California will be localized.”
In the meantime, investors such as Zhou remain confident that now is the time to purchase.
“It’s a great investment for the long term,” Zhou said. “It’s the best thing I’ve ever done for myself other than coming to the United States.”
Wang, the Taiwanese native who manufactures toys in China, is happy enough with her Irvine home that she is considering buying another house -- in New Home Co.’s Lambert Ranch development, which opens next month -- as an investment.
“Buying now is a good investment,” Wang said. “The school system is great, the roads, the convenience, the weather. Irvine is the most beautiful place I’ve ever been to. It’s a great time to buy.”
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