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I By GERD-ULF KRUEGER Chief Economist C alifornias ethnic and cultural diversity has always influenced its housing market lifestyle and its business investments. A great example of this is the increasing Asian American influence in demand for new housing in the Los Angeles Basin. Historically Southern California home builders have shown a proclivity towards building in the suburbs which used to be culturally conservative and broadly middle-class. However since at least the early 1980s things began to change. The Great Recession accelerated these trends. Old home building conventions were no longer working with the same emphatic certainty. Some builders felt that perhaps homebuyers would be willing to embrace smart growth concepts and make similar tradeoffs in order to live in smaller denser units to maintain closer proximity to job centers retail entertainment and walkable spaces within their communities. The Olson Company Olson is a home builder with a longstanding In-Town tradition and expertise. Early in the current housing cycle Olson discovered what other urban residential developers were hoping for their buyers were committed to staying close to the urban core even as they proceeded through marriage forming households having children and retirement. This trend was most pronounced in areas with highly rated schools safe communities and proximal recreational amenities. While these overarching needs were expected what was not expected was the revelation that along the path of smart growth and more by chance than by design the majority of its buyers were Asian American. After many years of hard work Asian Americans are now an integral part of the U.S. economy. Many have good jobs above-average incomes and some have become wealthy in the United States. In the process Asian Americans have become a prominent buyer group in the emerging urban infill and suburban housing markets of Southern California. The courtship of Asian American buyers by builders such as The Olson Company has resulted in a productive dialogue with a new middle class profile. Olson has actively engaged this community by accommodating new tastes needs and ancient Asian design principles such as Feng Shui. This article uses information on the overall ethnic composi- tion of 15 Olson communities. This database is unique in the homebuilding industry because of the detail in which it provides a wealth of demo- graphic income mortgage and geographical information. The findings are remarkable 62 of the total buyers in the examined Olson communities were Asian. To be specific this population was Pan-Asian composed of the following breakdown 32 of the buyers had Chinese surnames 16 Vietnamese 7 Indian 5 Korean 2 Japanese and 1 Filipino. The general characteristics of the observed information indicate that the Asian buyers of homes built by The Olson Company are Asian-American and not recent newly-wealthy homebuyers from Mainland China or other Pacific Rim Nations. Rather they are first-and second-generation Asian Americans. They typically work in STEM Science Technology Engineering and Math jobs in various mid-level business functions own businesses and often work in academia and medicine. Their main motivation to buy is ownership prox- imity to jobs and a desire for better schools and neighborhoods. There is a surprisingly large percentage of first-time homebuyers and very few investors. The vast majority of buyers used conventional financing with most buyers being from cities in the same submarkets in which they were buying their Olson homes. Many buyers also worked in cities located in the same submar- kets of the homes they purchased. This article has shown that Asian-American buyers have become a major demand source for the Southern California urban new home market. This represents a change from the traditional practice of suburban new housing developments which feature large homes and backyards in the outer fringes of Southern California. Instead a fresh dynamic is emerging in which a new style of home building based on smart growth principles and closeness to urban job cores has become accepted both by home builders and a major sophisticated consumer group. Furthermore good relationship building with local business and community leaders can help in the search process for residential projects and help gain approval for entitlements. It is important to recognize that this new dynamic is driven by Americans who are firmly rooted in both Asian and American experiences creating a very innovative framework for doing business together. This may be just the beginning of an urban renaissance which will bring about new styles and practices of conducting research new product design new marketing techniques and ways of relating to the customer. Gerd-Ulf Krueger is President and Chief Economist of HousingEcon.com a housing and economic consult- ing firm. He has served in economic advisory roles for the California Department of Finance and the California State Controllers office. This article is based on a re- search paper authored by Krueger and Olson Company President and CEO Scott Laurie that was published in the Cornell Real Estate Review of the Cornell University Baker Program in Real Estate Vol. 13 June 2015. I Home Builders Connecting With The Evolving Asian American Community 28 The courtship of Asian American buyers by builders such as The Olson Company has resulted in a productive dialogue with a new middle class profile. Olson has actively engaged this community by accommodating new tastes needs and ancient Asian design principles such as Feng Shui. Economist Gerd-Ulf Krueger claims Asian Americans have become a prominent buyer group in the emerging urban infill and suburban housing markets of Southern California. 2015_OlsonCompanyInTownLiving_PortAnniversary 8815 118 PM Page 28