Veteran industry observer Tom Dooley is president of TWD Associates, a real estate consulting firm in Arlington Heights, Il., and editor of two monthly newsletters. Contact him at 847/398-6410; email@example.com.
Industry Watch: Chinese Lead Immigrant Groups in Homeownership
Chinese-Americans place a high value on homeownership and put their money where their mouths are.
January 1, 2003
American of Chinese ancestry have a higher homeownership rate for their income than white Americans, finds new research by real estate economist Gary Painter, Ph.D., of the USC Lusk Center for Real Estate. When comparing homeowners with similar income levels in Los Angeles, the Chinese-American homeownership rate is 20 percent higher than whites; in San Francisco, 23 percent higher; and in New York, 18 percent greater. Painter concluded that Chinese are more likely than other immigrant groups to curtail spending so they can own a home.
As a whole, Painter’s study found that Asian households have homeownership rates similar to whites in Los Angeles and San Francisco, but much lower rates than whites in New York. Korean-Americans had the lowest average rate of homeownership rates of Asian families in all three metropolitan areas.
Dr. Painter, an associate professor in the USC School of Policy, Planning, and Development, found that among Asian immigrants in New York, the Japanese were least likely to own a home. He attributes this to the high percentage of Japanese temporary workers and students who choose to rent.
A detailed summary of Dr. Painter’s work “Heterogeneity in Asian American Homeownership: The Impact of Household Endowments and Immigrant Status” is available on the USC Lusk Center Web site.
For some voters, open space and affordable housing seem to be worth the cost. That’s the conclusion reached by David Arnold, writing in The Boston Globe. He notes that although Massachusetts residents nearly voted the state's income tax out of existence at the polls in November 2002, many of those same voters agreed to a 3-percent levy on their own property tax bills to bankroll measures that preserve open space in their communities.
Under its Community Preservation Act of 2000, Massachusetts provides matching funds. The money is spent not only on conserving natural areas but also on rehabilitating historic buildings and creating affordable housing. A total of 11 Massachusetts cities put the issue of increasing property taxes for this program on the ballot last election season, and seven of them passed it. That brings the total number of municipalities statewide embracing the measure in the past two years to 58.
How would you like to have a domain that concludes with the suffix “realestate”? At its annual meeting in December 2002, the Internet Corporation for Assigned Names and Numbers announced that it would be issuing new domain suffixes as early as this year. While ICANN has not indicated that real estate will be one of the industries selected, any organization can offer to sponsor a top-level domain, providing it can show that its group is well defined and is willing to pay $50,000 for the privilege.
In 2000, seven new domains were allowed, including .biz and .info. Since then, the number of registered domain names has grown into the millions, pressuring ICANN to offer a wider selection of top-level domains.
The good news: Mortgage volume is up. The bad news: So is mortgage fraud. The volume of home mortgages initiated in 2002 jumped to nearly $ 2.5 trillion, up from a little more than $2 trillion in 2001. However, as reported in the December 13th edition of the Wall Street Journal, Federal Bureau of Investigation statistics show that mortgage fraud continues to rise hand-in-hand with originations. The value of mortgage fraud climbed from more than $250 million in 2001 to nearly $300 million in 2002.
The Journal article attributed more than 20 percent of such fraud to unscrupulous appraisals, quoting data from the Mortgage Asset Research Institute Inc. Another major contributor is false documentation. "It often starts with applicants maybe not telling the truth about their income, and it goes from there," according to Vee Morton, until quite recently head of the fraud unit for Bank of America Mortgage. Ms. Morton is now owner and manager of Morton Associates, a Troy, N.C., company specializing in fraud detection and prevention.
Banks experienced a setback in their attempts to enter real estate with the resignation of Treasury Secretary Paul H. O’Neil, speculates The American Banker. In its December 13 edition, the magazine, published by Thomson Media, reported that some bankers had become increasingly optimistic that they would be granted real estate powers thanks in part to positive remarks Mr. O’Neil made last October to a North Carolina Bankers Association meeting in Charlotte, N.C.
"He told us at that time that, as soon as the election was over, Treasury would go ahead and write the regulations," said Thad Woodard, the president of the North Carolina Bankers Association, in the article.
Asked if he thought Mr. O'Neill's departure could affect the debate, Edward L. Yingling, the American Bankers Association's executive vice president, said, "I think the fact that there is a new secretary could slow things down, but ultimately this is a matter of complying with a standard in the law, and the law is pretty clear."
A spokesperson for the National Association of REALTORS®, which opposes the entry of banks into real estate, said he believes that any such statement is moot because the decisive battle over the issue will be conducted on Capitol Hill. He notes that the vast majority of House members who supported the law banning banks in real estate have been re-elected. Additionally, Alabama Senator Richard Shelby, who is poised to become the chairman of the Senate Banking Committee, has expressed firm opposition to the notion of banks entering the real estate brokerage arena.
The Pennsylvania Station Redevelopment Corp., plans to turn the historic Farley Post Office in New York City into a major transportation terminal. The change in ownership from the U.S. Postal Service to the developer is expected to be transparent to postal customers, as the retail lobby and other services will be retained in the building. Mail processing operations and administrative functions now in the Farley Building will be moved to other New York City postal facilities. Terms of the sale have yet to be disclosed pending finalization of agreements.
Nebraska and Kansas have reached a court-imposed settlement that will enable citizens of both states to continue satisfying their thirst for water. The solution came after a long legal battle over use of water from the Republican River basin.
Kansas filed suit against Nebraska in 1998, accusing its neighbor of breaching a 1943 compact by allowing irrigators to drill wells along streams and tributaries and thus divert more than the state’s legal share of the river's water. The Republican River flows out of northeast Colorado across the very northwest corner of Kansas, and then meanders across southwestern Nebraska before re-entering Kansas just south of Superior, Neb. According to the 1943 agreement, Nebraska is entitled to 49 percent of the Republican’s water, Kansas to 40 percent, and Colorado to 11 percent.
Nebraska argued that the compact didn't cover groundwater use because it was signed before deep-well irrigation was used in the river basin. It also said Kansas has received its full share of water from the river each year with the exception of 1992, when there was a drought.
Kansas had once estimated that Nebraska might have to pay as much as $100 million in damages, but Nebraska Governor. Mike Johanns said that under the settlement Nebraska will pay no money damages or be required to allocate more water to Kansas. However, Nebraska will have to be careful about allowing any more irrigation wells.
The agreement still needs approval by Special Master Vincent McKusick, who was appointed by the U.S. Supreme Court to hear the dispute, but his authorization is expected promptly.
As I See It: "Water, water everywhere…" but is it enough?
Most real estate professionals probably have a vague recollection of the term “riparian rights” from their days of preparing for the state licensing exam. We know that it has something to do with water and real estate, right?
But whether the issue is called riparian, aquatic, appropriation diversion, or some other term, real estate practitioners, property owners, and governmental bodies may soon find themselves involved in numerous, and, often cantankerous, disputes over water and the availability and use thereof.
Already in some parts of the country, there are conflicting interests claiming the rights to drinking water, irrigation rights, even recreational pursuits and navigation opportunities.
In the vast, highly diverse, heavily populated, and agriculturally productive region of the United States that draws its water supply from the Colorado River, the situation is close to acute. Seven states and Mexico use nearly every drop of the Colorado water flow, reducing a once-lush delta on the Gulf of California to a sliver in a sun-baked mudflat. The river satisfies the thirst of more than 25 million people and irrigates some of the nation’s most profitable farms in California’s Imperial Valley. But as the demand from all sources grows, decisions will have to be made whether to water farms or service burgeoning cities.
In strictly geographic terms, the Earth is awash in water, but the vast majority of it is currently unusable for human consumption. That’s because, according to the National Geographic Society, accessible fresh water in lakes, rivers, and aquifers, often called “renewable water,” is less than one-tenth of 1 percent of all the Earth’s water--and it rarely lies where it is needed most.
Scarcity is always an upsetting factor in a supply-demand equation, and at some point, water supply may well become a determining factor in real estate availability, pricing, and possession. Real estate professionals and local governments will do well to give serious thought to the water supply of their communities in their advance planning scenarios.
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Updated: November 14, 2018