Chinese Foreclosure Tourists Shopping In U.S.
STEVE INSKEEP, host:
A different sort of economic stimulus is coming to the United States from Asia. It comes in the form of Chinese tourists: real estate tourists. They're lured here by a housing market that's gone belly up. A group of 40 Chinese shoppers came to the U.S. this week in search of foreclosed properties and other housing bargains.
NPR's Anthony Kuhn talked with a couple of the tour group's members and filed this report from Beijing.
ANTHONY KUHN: Business is good with Beijing-based lawyer, 45-year-old Ying Guohua. His practice covers trade, finance and real estate. And debt-default cases have been keeping him busy lately, so busy he can barely find time to be interviewed over a cup of coffee, much less go off two weeks of home hunting in the U.S. But, he says, it's a good time to go shopping.
Mr. YING GUOHUA (Lawyer, Beijing): (Through Translator) Nobody's certain if U.S. property prices have bottomed out yet. But prices are definitely lower than in recent years, and in general, it's a good opportunity. It's possible that prices may drop further, but people invest partly based on their needs. And I have a need for this kind of home.
KUHN: Ying's law firm is getting more American clients. He and his wife are considering sending their three-year-old son to school in the U.S. later. And besides, Ying's got the money. He says he's looking for a nice neighborhood not far from the city center, probably in New York or Los Angeles.
Mr. GUOHUA: (Through Translator) I'm looking for a home in the $500,000 range. But if the quality is really good, I can go higher. If it's good value for the money, I'll consider it.
KUHN: If anyone asks Ying if he'd like a mortgage with his new home, he'll probably say no thanks and just pay it all at once in cash. A half a million dollars is a lot in a country that still has hundreds of millions of rural poor. But compared to home prices in China's top cities, it's not so bad.
Mr. VINCENT MO (Founder of Soufun.com): In Beijing or Shanghai, it's really not expensive at all.
KUHN: Vincent Mo is the founder of China's leading real estate Web site soufun.com, which is organizing the house hunter's tour.
Mr. MO: In Beijing and Shanghai, probably you'll need to start with the half-million U.S. dollar to buy a good area, a good, you know, apartment here. If you're going to buy a house or something, you probably need to have, you know, two millions to five million U.S. dollars.
KUHN: Mo got around 400 applications for the 40 slots on the first group, which includes quite a few real estate professionals. There will be bargain hunting and site seeing in New York, Boston, Las Vegas, San Francisco and Los Angeles. Mo says that officials from Australia, Singapore and Spain have recently contacted soufun.com and expressed interest, too.
Mr. MO: They would like to see similar groups. Soufun.com can organize to do some shopping tours.
KUHN: It's only in the past decade that large numbers of Chinese have saved up enough money to start buying cars and homes. The government helped things along by privatizing a lot of its housing stock a decade ago. Lawyer Ying says he already owns three homes.
Mr. GUOHUA: (Through Translator) Most Chinese people share a traditional notion. They see home ownership as very important and a key indicator of success in life.
KUHN: China's government and institutional investors have so far been wary about buying up distressed U.S. assets. But there are still plenty of reasons for newly wealthy Chinese citizens to invest in the U.S. Despite the current downturn, many Chinese investors consider the U.S. real estate market as more mature and standardized than their own. Business and educational ties between the two countries are flourishing. And with China's currency strong against the dollar, there may be some bargains that are just too good to pass up.
Anthony Kuhn, NPR News, Beijing.
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INSKEEP: Those Chinese house hunters do have some possible bargains. Falling home prices have created the most affordable housing market in at least five years. That's according the National Association of Home Builders. More than 60 percent of recently sold homes were classified as affordable, which means the average family is spending 28 percent of its income or less to buy the house. But the Chinese visitors should be aware of the regional differences: New York City is currently the least-affordable city in the country. And the most affordable city is…
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INSKEEP: …Indianapolis, Indiana, for the 14th consecutive quarter. Transcript provided by NPR, Copyright NPR.