For the last few years I’ve been keeping an eye on the news about investor visa programs like the US EB-5 program. These programs typically give wealthy foreigners permanent residency in exchange for a large investment in business or real estate. They’re often controversial because they give a path to citizenship (something sacred) in exchange for cash (something profane). It’s also unclear whether these programs actually produce any economic benefits for the countries and regions that receive the investment.
Stories about unintended effects of foreign investment on the real estate market have been popping up in the last few weeks. (Not all foreign investors are doing it in order to get permanent residency, but one can assume that a good number of them are.) In Vancouver, groups of unrelated families are moving into large mansions owned by offshore investors. As foreign investment and other factors are making housing increasingly unaffordable in the city, sharing a large house that would otherwise have sat empty has emerged as an alternative housing strategy.
While the article suggests that most of the group housing mansions in Vancouver are older buildings, overseas investors here in the Los Angeles region are building brand new ones. Wealthy Mainland Chinese are buying lots in the San Gabriel Valley suburb of Arcadia, razing the ranch-style homes on top of them, and building mansions. As in Vancouver, many of these new mansions sit empty. Will groups of yuppie families, priced out of LA real estate, be moving into these buildings, too?