08/09/2010

Conservative Asian buyers snapping up foreclosed US homes

 A survey by a US realtors group has highlighted a remarkable rise in the number of Asian and Asian-Americans buying houses in the US. The consensus is that the demographic primarily avoided being caught in the housing crash, because they tend to be conservative towards property purchases, and that now they are capitalising on the fact that they have the cash and the credit to get good deals on homes.

According to the California Association of Realtors Annual Housing Market Survey, the proportion of ethnically Asian — most commonly Asian Indian, Japanese, Chinese or Filipino — buyers rose 3.8% between 2007 and 2008 and a further 2.3% between 2008 and 2009. This left the total proportion at 18.1 percent in 2009, up from 12% in 2007. The surveys also tell us that the proportion of Asian buyers never went higher than 12% even at the height of the boom (2003-2006).

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

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

Source: Overseas Property Mail, August 2010

P4P Comment

Shrewd investors know the time to invest is when prices are at the lowest. When many are fearful because there are economic problems. This approach has been called “Crisis investing” and can be very profitable.

Asian investors often have wider family support and come from countries with a traditional habit of saving, as there is no social security to act as a safety net. That such cautious people are spending heavily on foreclosed US houses says a lot about what bargains these properties are.