I read with interest the August 29, 2024 article of New York Times writer Ralph Vartabedian on the rise of corruption in local politics in California cities. How a Real Estate Boom Drove Political Corruption in Los Angeles (New York Times, August 29, 2024) begins with the downfall of Los Angeles City Council member Jose Huizar, the head of the committee approving commercial development projects. Huizar, caught accepting bribes from Chinese developers, was sentenced to 13 years in prison for tax evasion and racketeering. The New York Times reports that Huizar is the third member of the Los Angeles City Council to face such charges in a widespread investigation into bribery and influence-peddling in California.
In the last 10 years, Vartabedian reports, 576 public officials in California have been convicted on federal corruption charges. Federal investigators have called the volume of cases “extraordinary”; the article focuses on how the Democratic supermajority in California state government protects those in office from exposure.
The conclusion that the widespread corruption is endemic to California and connected to the democratic majority is simplistic. It’s not surprising that “political analysts” would attribute an increase in corruption cases to the politics of the state. And the decline of any effective local press is a pervasive condition from coast to coast. California is vast, diverse, and multicultural. California has always attracted those seeking opportunity—from refugees to real estate investors.
One of the mobbers once said to me that the “industry” was “built on” harassment. When real estate scams follow victims across state borders and are enabled by the support of local police, at least some local city officials, workers, and National Neighborhood Watch groups and their “block coordinator” successors, the problem is not limited to California. This sort of phenomenon indicates an industry in dire need of regulation. The corrupting influence of money appears to be as strong as that of power, and perhaps more when the money comes in great amounts or in the form of cash.
In 2020, China began a crackdown on risky business in its own residential real estate market (China Is on Edge as Fallout From Its Real Estate Crisis Spreads, The New York Times, August 20, 2023). China had come to rely on real estate market; more than a quarter of the country’s economy relied on real estate development. In 2023, Chinese buyers were responsible for 13% of U.S. residential purchases made by foreign nationals (Juwai.com, https://list.juwai.com/press/2023/09/Chinese-homebuyers-dominate-foreign-purchases-of-U.S-homes). In 2022, according to the New York Post, foreign investment was the heaviest in Florida at 24%, a trend that began 14 years before. California was second, with 11% of foreign investments (“Chinese spent $6.1B on US real estate last year,” July 20, 2022, https://nypost.com/2022/07/20/chinese-buyers-spent-record-6-1b-on-us-real-estate-in-2021/). Despite conditions in China, the Post notes that nearly six of 10 Chinese buyers made cash purchases.
In a 2023 article on the website of the Federal Reserve Bank of Boston, writer Jay Lindsay reports on the “under appreciated impacts” of the “massive and increasing investment” by Chinese buyers into the California real estate market (https://www.bostonfed.org/news-and-events/news/2023/11/china-massive-us-real-estate-investment-housing-shock-major-impacts-leslie-shen-boston-fed). The trend began in 2008; by 2013, Chinese buyers were attributed with 3.5% of the total housing transactions in California. The result was increased employment and property values, with lower-income residents displaced from their homes. One of the features of the investment was that more Chinese home owners did not correlate with an increase of Chinese immigrants to the United States. Rather, the study suggested that the Chinese buyers frequently left their overseas houses vacant and used the new address to apply for the green cards necessary to give their children U.S. residency. The research additionally showed a correlation between the housing purchases of Chinese foreign investors and a reduction in the count of lower income homes. The winnowing of lower-income homes and families from the Bay Area is just what organizations like the Bay Area Community Land Trust are working against by organizing to provide housing as democratic co-operatives. If equitable housing is no longer important in the San Francisco Bay Area, that should at least be a decision made for the benefit of Bay Area residents who are or want to become citizens of the United States. Our values should not change to line our pockets or those of foreign investors.
In 2023, Canada instituted a two-year ban on the foreign purchase of single-family homes. According to the BBC, “The ban aims to help ease one of the most unaffordable housing markets in the world” (https://list.juwai.com/press/2023/09/Chinese-homebuyers-dominate-foreign-purchases-of-U.S-homes). Said then federal housing minister Ahmed Hussen: “Through this legislation, we’re taking action to ensure that housing is owned by Canadians, for the benefit of everyone who lives in this country.” As someone whose childhood home seems to be a prospective “investment” for others, I appreciated the elaboration on Hussen’s comment: “…Hussen said the ban is meant to discourage buyers from looking at homes as commodities instead of a place to live and grow a family.”
As a longtime resident of Seattle, Washington, about two hours south of Vancouver, British Columbia, I heard about the intense interest of Chinese investors, in particular, in real estate markets up and down the Pacific Coast. Chinese investments in the United States grew as Chinese investors encountered obstacles in China. In 2015, The Seattle Times reported that China’s attempt to put the skids on the reliance of the economy on real estate and transition to a service economy encouraged the wealthy to diversify in safer markets. In 2015, Chinese foreign nationals made the most purchases of homes in the United States, totaling 16% of international sales. Perhaps more meaningfully, Chinese buyers spent more than twice as much on their homes than buyers from other countries (https://www.seattletimes.com/business/economy/affluent-chinese-see-upscale-safe-haven-in-seattle-area/). Chinese investors were also a major source of funding for more than $2 billion of commercial development projects in the Puget Sound region. The strength of Chinese investment abroad is due to the weakness of Chinese markets. The increased interest in residential purchases is the result of increased obstacles in turning Chinese investments into overseas cash. This makes financing options like mortgages all the more attractive. According to a broker from Realogics Southeby’s International Realty, “That doesn’t change the trajectory…. It just changes how quickly they divest from China.” If “divestment” requires purchase, the greater the cost of the purchase, the better.
California, with the world’s fifth largest economy (https://www.gov.ca.gov/2024/04/16/california-remains-the-worlds-5th-largest-economy/), has long been a mecca for investors. And in a country where we’re taught that our homes are our greatest “investment,” we all want a piece of the pie—maybe more than one. Online investment firms like the Oakland, California-based Roofstock sell “investor services” based on a “scientific approach to single-family rentals.” Given that Roofstock’s “scientific” approach includes the acquisition of “off-market” properties, having a Roofstock employee living next door to one’s Bay Area home might not be auspicious. RealWealth, a site advocating the generation of passive income by “conscious” investment in single and multiple family dwellings (“Created By Real Estate Investors Who Care About Other Investors”) promotes Los Angeles County as one of a number of the “Best Places in California to Invest in Real Estate 2020” (https://realwealth.com/learn/is-california-a-good-place-to-invest-in-real-estate/). These areas have been populous, popular and historically challenging markets for home buyers. With a trend towards regarding homes as nothing more than commodities to be bought, sold, and rented in volume at profitable prices, investors will go where the money is. Investors in single-family homes enter highly competitive housing markets and make themselves into middlemen, buying houses we can’t afford and renting them at prices that are unaffordable.
When it comes to housing scams like mobbing that appear to travel through police-installed block watch programs, California has the most watch programs—3,828. This according to according to an article on the Vivint security camera website, a company that apparently knows its customer base (https://www.vivintsource.com/smart-home-academy/neighborhood-watch-programs-by-state). According to the website of the Albany Police (in California), they’d like to have a block coordinator on every block. Perhaps it would increase the city’s take of property transfer taxes.
In an era when digital crimes abound and crimes routinely exhibit digital features, it makes sense that California—the home of Silicon Valley, the Ring security camera, drone ventures, virtual reality and game companies and more—is on the bleeding edge of the use of technology in policing, and in crimes and scams galore. With the proliferation of consumer and prosumer devices, predators who know next to nothing about wireless networks or programming can eavesdrop, monitor and stalk with impunity. And with range extenders, mobile routers and cameras, radio-frequency producing lights and interfering charging processes, criminal tourism is not limited to breaking into houses but is a component of crimes like real estate mobbing by neighbor and anyone with proximity or remote access to the mobbing infrastructure. States with tech hubs are amply provisioned not only with the appliances and devices of mobbing, but with an understanding of their malicious use. Forbes names California the best state for solar energy (https://www.forbes.com/home-improvement/solar/best-worst-states-solar/). EV charging processes are “embedded” into California mobbings where those block coordinators on every block “coordinate” with neighbors to deploy “generators” like EV chargers, PowerWalls, solar panels, and RF-spewing Teslas to sabotage the galvanized pipes and knob-and-tube electrical systems of the California Proposition 13 houses they want investors to turn into profit.
As for the federal investigation into the corruption of local government in Los Angeles, California—Albany is a day’s drive from LA. Highway 1 is stunning this time of year.
