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.
The trend has also been noted by local realtors in San Diego and Southwest Riverside counties, who said that Asian’s tend to be uncomfortable taking on too much debt, and have preferred to invest in their small business rather than buy property during the boom.
“Asians are very conservative when it comes to buying,” said Scripps Ranch realtor and president of the San Diego chapter of the Asian Real Estate Association of America, Shonee Henry, “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 mused that homes being too expensive was also a reason for Asians holding off buying during the boom:
“They might have had the down payment, but the monthly payments were too high,” she said.
Now that average house prices are down 35% the conservative Asians are in the fortunate position of having sizeable down-payments.
The CAR survey said Asian buyers put down an average down-payment of $90,000 in 2009, triple that of non-Asians. This was mostly in the form of 20% of the purchase price, compared to the 10% stumped up by non-Asian buyers. Appleton-Young said Asians may be avoiding low-down-payment programs such as those offered by the Federal Housing Administration.
This is one trend that is not echoed however; Ric Manalo, a Realtor with offices in Temecula and Chula Vista, said that Asian buyers in Southwest Riverside were making use of 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.
Henry pointed out variations between the different nationalities; she said that her Filipino buyers went with low down-payment programs, while Chinese buyers tended to have cash for big down payments.
Photo credits: Jeff Turner via Flickr