Thread: After ducking the bubble, Asian buyers seize upon lower pric

HOUSING: After ducking the bubble, Asian buyers seize upon lower prices

Financially conservative outlook leaves many with cash

ERIC WOLFF - ewolff@nctimes.com
July 10, 2010 8:30 pm

A substantial number of Asians and Asian-Americans dodged the housing crunch, and now they're taking advantage of low home prices and low mortgage rates in California, say local real estate agents and a survey from a Realtors group.

The proportion of California homebuyers who were ethnically Asian, a group whose heritage may be Asian Indian, Japanese, Chinese, Filipino, or a host of others, rose from 12 percent in 2007 to 15.8 percent in 2008 and 18.1 percent in 2009, according to the California Association of Realtors Annual Housing Market Survey.

Local real estate agents said they've seen the increase in Asian buyers in San Diego and Southwest Riverside counties. They said Asian buyers are typically financially conservative, and thus stayed away from the overpriced homes of the housing bubble in the mid-2000s. Now these buyers have the cash and credit to take advantage of reduced housing prices.

Leslie Appleton-Young, chief economist for the California Association of Realtors, said the change in the proportion over time was noteworthy.

"They’re buying in distressed markets and utilizing (government incentive) programs," she said.

During the height of the boom, from 2003 through 2006, the proportion of Asian homebuyers never rose above 12 percent, according to the surveys.

Local real estate agents said many Asian buyers prefer to invest in their own small businesses, and many are uncomfortable taking on too much debt.

"Asians are very conservative when it comes to buying," said Shonee Henry, a Realtor in Scripps Ranch and president of the San Diego chapter of the Asian Real Estate Association of America. "We don't go out there and buy, and forget about what's going to happen tomorrow. We tend to make sure we have enough money to support ourselves and everyday expenses."

Henry opined that many Asian-Americans avoided buying during the peak of the boom partly also because homes were expensive.

"They might have had the down payment, but the monthly payments were too high," she said.

Now, with the median home price down 35 percent from the 2006 peak, these buyers have cash to make purchases and put down sizable down payments.

The CAR survey said the median down payment on a house by Asian buyers was $90,000 in 2009, triple that of non-Asians. They also consistently paid 20 percent of the sales price as a down payment, whereas non-Asians put down 10 percent. Appleton-Young said Asians may be avoiding low-down-payment programs such as those offered by the Federal Housing Administration.

But Ric Manalo, a Realtor with offices in Temecula and Chula Vista, said the Asian buyers he worked with in Southwest Riverside were indeed tapping into low-down-payment programs.

"The margin between what it costs to rent a home and what it costs to buy a home is so small, most of these are FHA and VA (Department of Veterans Affairs) deals they can get in for very little money," he said.

Within the broad umbrella category of "Asian," there's wide variation among buyers. For example, Henry said her Filipino buyers went with FHA programs, while Chinese buyers tended to have cash for big down payments.

There's also an influx of foreign buyers generally in the market, as prices in Shanghai and other East Asian urban areas have skyrocketed, and the Chinese yuan becomes more valuable against the dollar.

Albert Salon, a Realtor in San Diego, has been getting calls from Chinese banks looking to buy American real estate.

"It's a bit of a mix; a lot of individuals out there that are sitting on cash, and a mix of businesses that need to invest in some of our assets," he said. "They're becoming a large landholder here in America."

Call staff writer Eric Wolff at 760-740-5412.

http://www.nctimes.com/business/article ... cfc94.html

Real estate goes retro. A repeat of the 80's. Imagine that.