Hundreds of Chinese Americans gathered in central Dallas carrying signs that read “Stop Chinese Exclusion” and “Stop Asian Hate” on Jan. 29. The reason behind it? Texas Gov. Greg Abbott tweeted that he would sign a bill that would ban all Chinese citizens from buying property in Texas.
Although Abbott said the law’s intent is to protect American domestic security from foreign espionage, which applies to Russian, Iranian and North Korean nationals as well, the legislation mainly affects the 235,000 Chinese-American residents who live in the state. The bill does not provide exceptions for legal permanent residents, dual citizens or green card holders.
While a similar law is highly unlikely to be passed in California because of the state’s previously liberal record, its implementation would most likely harm the real estate market, as over 15% of home buyers in the Bay Area are Chinese citizens.
Palo Alto is a very attractive location for families to move to, being located in the heart of Silicon Valley and boasting some of the best public schools in the nation. With Palo Alto real estate prices more than doubling in the past decade, the appeal of the city is evident.
Erika Enos, a longtime realtor and resident of Palo Alto, said the Bay Area’s long-established Asian communities in the region also make Palo Alto’s real estate market especially appealing to newer Asian immigrants, providing a sense of security and familiarity.
“Besides the climate and the culture, part of it too is the diversity, which makes it appealing because it makes people who come to this area feel safe,” Enos said.
Enos said many wealthy Chinese families also want to diversify their assets outside of the volatile Chinese investment market. Investing in property abroad is seen as a stable investment that can protect and build their wealth.
“I had a listing in 2016 where the people who bought the house were Chinese immigrants, and they got their down payment from their (extended) family in China putting their money together,” Enos said. “It was a form of investment for their whole village.”
However, Enos said that since these properties are often viewed as investments rather than homes, many of them are left empty.
“I had a listing where a woman bought a house in College Terrace,” Enos said. “She never saw it. She just bought it because she needed to park some money somewhere because she was in Beijing.”
As long as the practice of foreign investment is ongoing, Enos said those who are not an active part of the community change the dynamic of the area.
“Property is what creates the culture,” Enos said. “Once you allow people who don’t have a stake in the betterment of the culture to take over, you lose control.”
In addition, according to the National Association of Realtors, Chinese residents are twice as likely as Americans to pay in cash, which is an attractive factor for many sellers in real estate transactions because cash transactions are more stable and guaranteed compared to a loan. Enos said this factor contributes to the exclusion of low-income residents who are essential to the Palo Alto economy from purchasing affordable housing.
“It’s all supply and demand, and it’s taken away from people who actually live here from being able to buy because people come in with cash,” Enos said. “People would prefer to have cash rather than a buyer getting a loan.”
However, direct foreign purchases from China have slowed down after President Xi Jinping announced regulations in 2017 on foreign currency exchange, limiting exchanges to $50,000 annually.
CEO of De Leon Realty Michael Repka said the demographic of his buyers has shifted away from Chinese citizens living in China.
“The makeup of the buyers (has) changed,” Repka said. “Seven years ago, we were seeing a lot of people coming from China and buying here directly. Now, the majority of our clients (have) lived in the United States for several years, and they aspire to (move) to Palo Alto.”
Candy Wan, a sophomore who moved from China in 2016, said her family moved mainly for the education of her siblings and herself.
“Because my brother was almost college-age, my parents wanted him to get into a better college in the U.S.,” Wan said. “My mom also wanted us to get used to living in the U.S. so me and my sister could both get into better colleges too.”
Courtney Charney, a realtor in Menlo Park, said while foreign investment from China will continue to play a role in the market, it is important to note that there are positives to the increase in foreign investment from long-term residents.
“A common thread among these families that are coming is that they’re seeking something better for themselves and their families,” Charney said. “Whether it’s education, whether it’s job opportunities, whether it’s political climate. That’s why the law in Texas strikes me as so sad because if you look at their contributions to our schools, to our communities, to our job force, it’s a very real positive impact.”
