William C. Wheaton, professor of economics at Massachusetts Institute of Technology, argues that the housing market is due for improvement, calling home construction, “a sleeping giant that is about to wake up.”
Wheaton believes because there has been so little construction that demand exceeds the level of building and it will soon absorb excess inventory.
“Housing construction will not only rise, but it will stay high for a while, which didn’t happen in previous recoveries,” Wheaton predicts.
Source: Fortune, Nin-Hai Tseng (09/17/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
Thursday, September 23, 2010
Monday, September 20, 2010
Where is the shadow inventory?
We've been saying this for some time now - in our area, there is little inventory to speak of. Add to that the fact that we started the downturn at least a year and a half before much of the rest of the country, and it takes the wind out of the 'shadow inventory' case made by many who incorrectly associate it with northern Palm Beach County...
WASHINGTON – Sept. 20, 2010 – For the last year, the real estate industry has been talking about shadow inventory and the coming flood of distressed properties. Where are they?
Here’s what’s happening, according to a recent paper by Alan Mallach, a senior fellow the Brookings Institution:
• Some delinquencies have been resolved through loan modifications or people working out the problems on their own.
• Banks are getting better at managing short sales.
• Investors are aggressively buying up properties, sometimes in bulk, directly from the banks or at courthouse auctions so they don’t hit the market.
The likeliest outcome, Mallach predicts, is a steady flow of foreclosures over a long timeframe that will prevent another crash in home prices – but it will probably lead to low or no appreciation in home prices for a while.
Source: The Wall Street Journal, Nick Timiaros (09/16/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
WASHINGTON – Sept. 20, 2010 – For the last year, the real estate industry has been talking about shadow inventory and the coming flood of distressed properties. Where are they?
Here’s what’s happening, according to a recent paper by Alan Mallach, a senior fellow the Brookings Institution:
• Some delinquencies have been resolved through loan modifications or people working out the problems on their own.
• Banks are getting better at managing short sales.
• Investors are aggressively buying up properties, sometimes in bulk, directly from the banks or at courthouse auctions so they don’t hit the market.
The likeliest outcome, Mallach predicts, is a steady flow of foreclosures over a long timeframe that will prevent another crash in home prices – but it will probably lead to low or no appreciation in home prices for a while.
Source: The Wall Street Journal, Nick Timiaros (09/16/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
Wednesday, September 8, 2010
Florida population grows again
GAINESVILLE, Fla. – After declining for the first time since the end of World War II, Florida’s population grew once again last year, a hopeful yet tentative sign that the worst of the recession may have passed, according to the latest preliminary population estimates from the University of Florida (UF).
Stan Smith, director of UF’s Bureau of Economic and Business Research, estimates that Florida added a modest 21,000 residents between 2009 and 2010, but that follows a population decline greater than 56,000 between 2008 and 2009.
“Even though the state turned it around, it still represents the smallest population increase since the 1940s and does not make up for last year’s loss,” Smith said. “Florida’s population growth continues to be very, very slow by historical standards.”
Florida grew by more than 125,000 residents in every year from 1950 to 2008. It’s estimated that Florida added 21,285 residents during the past year, with its total population increasing from 18,750,483 on April 1, 2009, to 18,771,768 on April 1, 2010, Smith says. The previous year it lost an estimated 56,736 residents.
“Two years ago, the economy was deteriorating rapidly, while over the past year there have been some signs that it is leveling off or even improving slightly,” he says. “I think that’s the reason we’re seeing a small increase in population. Although technically the recession has ended, the economy continues to be in bad shape, particularly in terms of its ability to create jobs. There have been some jobs added in the last few months, but unemployment is still very high and job growth is very weak.”
Slightly more counties lost rather than added population, but the split was fairly even. In percentage terms, both increases and decreases in counties’ populations were generally very small, with no dramatic changes.
“At the state level, foreign immigration continues to be relatively strong, and the state also continues to have substantially more births than deaths, which are really the drivers of Florida’s growth in the last year,” Smith says.
The largest population gains were in some of the biggest counties. Miami-Dade led by adding an estimated 8,253 residents, followed by Hillsborough, 6,353, and Broward, 5,834. “Because they’re the largest counties, they have fairly sizeable numbers of births,” Smith says. “They also receive a substantial number of foreign immigrants.”
The county with the biggest percentage increase was Lafayette, which grew by 5.2 percent, but that change was largely attributed to the addition of state prison inmates. There was no pattern to which counties lost population, which were spread throughout the state and include both large urban counties and small rural counties.
The largest population decline was in Seminole County, which lost 3,659 residents, followed by Pinellas, 3,119, and Volusia, 2,055. In percentage terms, the county with the biggest decline was Glades, followed by Jackson and Holmes.
With a quick economic turnaround unlikely at either the state or national level, Smith expects Florida’s population to continue to grow slowly during the next year or two. But within the next 10 to 20 years, the state’s annual population growth could be as high as 250,000.
“From 2003 to 2006, Florida’s population grew by more than 400,000 per year, and in the previous three decades increases averaged about 300,000 per year, although there were certainly ups and downs from year to year,” he says.
Last year’s population decline, a result of the economic slump, was the first since 1946, when military personnel left the state at the end of World War II.
“If the economy recovers sooner than people expect, we would expect faster growth,” Smith says. “If it recovers less rapidly or even slips back into recession, we would expect that growth will continue to be very slow and possibly even be negative again.”
Between 2000 and 2010, the counties that grew the most in absolute numbers were Miami-Dade, Orange and Hillsborough. Flagler had the highest growth rate, 90.4 percent, followed by Sumter, 82.6 percent, Osceola, 59.8 percent, St. Johns, 50.6 percent, and Wakulla, 41.7 percent.
The population figures are interim estimates that will be replaced by numbers from the 2010 census when they become available early next year.
© 2010 Florida Realtors®
Stan Smith, director of UF’s Bureau of Economic and Business Research, estimates that Florida added a modest 21,000 residents between 2009 and 2010, but that follows a population decline greater than 56,000 between 2008 and 2009.
“Even though the state turned it around, it still represents the smallest population increase since the 1940s and does not make up for last year’s loss,” Smith said. “Florida’s population growth continues to be very, very slow by historical standards.”
Florida grew by more than 125,000 residents in every year from 1950 to 2008. It’s estimated that Florida added 21,285 residents during the past year, with its total population increasing from 18,750,483 on April 1, 2009, to 18,771,768 on April 1, 2010, Smith says. The previous year it lost an estimated 56,736 residents.
“Two years ago, the economy was deteriorating rapidly, while over the past year there have been some signs that it is leveling off or even improving slightly,” he says. “I think that’s the reason we’re seeing a small increase in population. Although technically the recession has ended, the economy continues to be in bad shape, particularly in terms of its ability to create jobs. There have been some jobs added in the last few months, but unemployment is still very high and job growth is very weak.”
Slightly more counties lost rather than added population, but the split was fairly even. In percentage terms, both increases and decreases in counties’ populations were generally very small, with no dramatic changes.
“At the state level, foreign immigration continues to be relatively strong, and the state also continues to have substantially more births than deaths, which are really the drivers of Florida’s growth in the last year,” Smith says.
The largest population gains were in some of the biggest counties. Miami-Dade led by adding an estimated 8,253 residents, followed by Hillsborough, 6,353, and Broward, 5,834. “Because they’re the largest counties, they have fairly sizeable numbers of births,” Smith says. “They also receive a substantial number of foreign immigrants.”
The county with the biggest percentage increase was Lafayette, which grew by 5.2 percent, but that change was largely attributed to the addition of state prison inmates. There was no pattern to which counties lost population, which were spread throughout the state and include both large urban counties and small rural counties.
The largest population decline was in Seminole County, which lost 3,659 residents, followed by Pinellas, 3,119, and Volusia, 2,055. In percentage terms, the county with the biggest decline was Glades, followed by Jackson and Holmes.
With a quick economic turnaround unlikely at either the state or national level, Smith expects Florida’s population to continue to grow slowly during the next year or two. But within the next 10 to 20 years, the state’s annual population growth could be as high as 250,000.
“From 2003 to 2006, Florida’s population grew by more than 400,000 per year, and in the previous three decades increases averaged about 300,000 per year, although there were certainly ups and downs from year to year,” he says.
Last year’s population decline, a result of the economic slump, was the first since 1946, when military personnel left the state at the end of World War II.
“If the economy recovers sooner than people expect, we would expect faster growth,” Smith says. “If it recovers less rapidly or even slips back into recession, we would expect that growth will continue to be very slow and possibly even be negative again.”
Between 2000 and 2010, the counties that grew the most in absolute numbers were Miami-Dade, Orange and Hillsborough. Flagler had the highest growth rate, 90.4 percent, followed by Sumter, 82.6 percent, Osceola, 59.8 percent, St. Johns, 50.6 percent, and Wakulla, 41.7 percent.
The population figures are interim estimates that will be replaced by numbers from the 2010 census when they become available early next year.
© 2010 Florida Realtors®
Wednesday, August 25, 2010
The best moves for home buyers and sellers
By Beth Braverman August 25, 2010: 8:55 AM ET
(Money Magazine) -- Plenty of forces, from overly cautious lenders to inaccurate appraisals, are wrecking real estate deals right now. But one of the biggest roadblocks to getting a house sold these days is the disconnect between buyers and sellers.
In general, sellers have gotten more realistic in pricing their homes than they were right after the housing bubble burst, but agents say that many still don't grasp how much they must concede to close a deal. And buyers are still spraying lowball offers around in hopes that sellers will be desperate enough to bite.
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Take such unreasonable expectations, multiply by two, and what do you get? "A standoff," says Glenn Kelman, CEO of real estate brokerage Redfin.
With the busy summer home-sale season drawing to a close, there's little time to waste. Whether you're trying to unload your place or land a new one, follow these dos and don'ts to negotiate the best deal -- fast.
If you're buying
Don't say: "I'll pay 85% of your asking price and not a penny more."
Instead: Look for homes that are fairly priced and make a reasonable offer. "Coming in about 10% below list is a good starting place for negotiations now," says Denver real estate broker Jeff Fogler. Yes, you have the upper hand in most markets, but the average homebuyer is paying only 2.7% below list price (see the chart). Set your expectations accordingly. You can always ask if the seller is willing to bridge a price gap in other ways -- for example, by picking up your closing costs (which can run $7,500 on a $300,000 house).
Don't say: "I haven't put my own place on the market yet."
Instead: List your current home before you start shopping seriously for the next one. Because it takes almost three months to move a house these days, sellers are loath to write home-sales contingencies into purchase contracts. You'll have far more leverage if you've gotten rid of your house before you start negotiating: Sellers know there's less chance of the deal falling apart. (Prequalifying for a mortgage helps too.) What's more, you'll know exactly how much money you can put into your new digs.
Don't say: "This is my dream house."
Instead: Stop imagining the great parties you'll throw there and gird yourself to walk away if the seller won't make reasonable concessions. Your ability to abandon negotiations is your most powerful bargaining chip. Given that plenty of other homes are on the market now, finding another place to love shouldn't be too hard. You might let the seller know that. Nicely.
If you're selling
Don't say: "You're offering how much? Forget you!"
Instead: When bidders lob low-balls at you, thank them for their interest -- and ask that they come back with earnest offers. "If you become offended, enraged, or unreasonable, you've blown any chance at negotiation," says Warwick, R.I., real estate agent Ron Phipps. These days many buyers are just testing you to see how big a discount they can get. Point the bidder to comparable recent sales that support your list price. (Received several super-low offers? Check the comps to make sure your price isn't too high.)
Don't say: "I didn't know the deck was rotting."
Instead: Pay a few hundred dollars to get your house inspected before you put it on the market. Then arrange to make any necessary repairs yourself. (In most states the law requires you to disclose to potential buyers any defects of which you're aware.) "Taking care of any inspection issues upfront helps sellers limit the points that buyers can negotiate on," says Pat Lashinsky, CEO of the national brokerage ZipRealty.
Don't say: "It might take us a while to move out."
Instead: Make sure to tell buyers -- especially those who might have children starting school this month -- that you're willing to scram pronto, if possible. That will help you stand out from any short sales in your area, which may have lower list prices but can take months to close. "If the buyers have a strict time limit, they're going to pay more money to get into a house quickly," says Ellen Klein, a realtor in Rockaway, N.J. More money plus more speed: That's what it's all about. To top of page
Monday, August 23, 2010
Hedge Fund Heavyweight Paulson Makes New Housing Bet
Ok, let the talking head dopes on MSNBC yap all they want about how bad it is - then ask yourself, "What are the people with real loot doing?"
Hedge fund manager John Paulson is underscoring his bullish bet on America in a big way.
The billionaire investor, who famously made more than $4 billion betting against the US subprime housing market at its peak in 2007, will be throwing his hat into the race to acquire residential land—and dirt cheap.
TimSloan | AFP | Getty Images
John Alfred Paulson, president of Paulson & Co., Inc.
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Paulson, who manages the $31 billion Paulson & Co. fund, has made a "stalking horse" bid of $42.4 million to acquire the assets of Engle Homes, which includes land and lots in Arizona targeted for more than 8,000 homes, and nine completed residences.
Engle-owned property in Colorado and Nevada is also part of Paulson's proposed deal. Engle is a subsidiary of Technical Olympic USA of Hollywood, Fla. [TOUSQ 0.0040 --- UNCH (0) ] .
The offer follows auctions earlier this year by TOUSA where Paulson also participated, according to Reuters and sources familiar with the matter.
Paulson runs the $31 billion hedge fund Paulson & Co.
With builders suffering due to continued sluggish sales of new homes, slow job growth, and the competition for market share, it really is survival of the fittest—talks of consolidation among the biggest players have been circulating in the industry and among investors.
According to Citigroup [C 3.75 --- UNCH (0) ] analyst Josh Levin, in a note issued to clients Wednesday, "We view consolidation as the proverbial elephant in the room. Management teams are not discussing the issue publicly, but we would be surprised if at least some of them were not talking about it privately.
Investors like Paulson see this as an opportunity to strike while the iron is hot. Buying land makes sense because they recognize the demand from builders who could benefit from increased supply and lower prices.
Hedge fund manager John Paulson is underscoring his bullish bet on America in a big way.
The billionaire investor, who famously made more than $4 billion betting against the US subprime housing market at its peak in 2007, will be throwing his hat into the race to acquire residential land—and dirt cheap.
TimSloan | AFP | Getty Images
John Alfred Paulson, president of Paulson & Co., Inc.
--------------------------------------------------------------------------------
Paulson, who manages the $31 billion Paulson & Co. fund, has made a "stalking horse" bid of $42.4 million to acquire the assets of Engle Homes, which includes land and lots in Arizona targeted for more than 8,000 homes, and nine completed residences.
Engle-owned property in Colorado and Nevada is also part of Paulson's proposed deal. Engle is a subsidiary of Technical Olympic USA of Hollywood, Fla. [TOUSQ 0.0040 --- UNCH (0) ] .
The offer follows auctions earlier this year by TOUSA where Paulson also participated, according to Reuters and sources familiar with the matter.
Paulson runs the $31 billion hedge fund Paulson & Co.
With builders suffering due to continued sluggish sales of new homes, slow job growth, and the competition for market share, it really is survival of the fittest—talks of consolidation among the biggest players have been circulating in the industry and among investors.
According to Citigroup [C 3.75 --- UNCH (0) ] analyst Josh Levin, in a note issued to clients Wednesday, "We view consolidation as the proverbial elephant in the room. Management teams are not discussing the issue publicly, but we would be surprised if at least some of them were not talking about it privately.
Investors like Paulson see this as an opportunity to strike while the iron is hot. Buying land makes sense because they recognize the demand from builders who could benefit from increased supply and lower prices.
Thursday, August 19, 2010
Inventory of homes for sale shrinks in South Florida
Inventory of homes for sale shrinks in South Florida
WEST PALM BEACH, Fla. – Aug. 17, 2010 – The number of homes and condominiums for sale across South Florida has steadily declined over the past two years, an encouraging sign for the region’s battered housing market.
Still, industry observers worry about a sizable “shadow inventory” of foreclosed homes that could complicate any real estate recovery.
Broward County had 19,869 properties on the market in July, down 35 percent from July 2008, according to a multiple listing service report compiled by the Keyes Co.
Palm Beach County’s inventory of homes and condos slid 31 percent to 23,947 during the same period.
The supply of new homes being built in the two counties also has decreased sharply in the past two years, said Brad Hunter of the Metrostudy research firm in Palm Beach Gardens.
In 2005, sellers rushed to list their homes, hoping to fetch record prices during the housing boom. But the frenzy led to a collapse and prices plummeted.
Thousands of foreclosures and short sales have clogged the market ever since, giving buyers plenty of choices and little reason to pay top dollar.
“You won’t get price appreciation until you get the inventory in balance,” said Mike Pappas, president of Keyes. “We’re making great strides.”
Declines in homes for sale already have helped stabilize prices recently.
The median price in Broward rose 7 percent during April, May and June to $209,800 from a year ago, the Florida Realtors said Wednesday. Palm Beach County’s median increased at the beginning of the year but dipped 2 percent in the second quarter to $235,500.
Pappas said his firm is handling fewer transactions involving foreclosed homes, and he thinks that’s an indication the foreclosure market has peaked.
But some analysts disagree, pointing to a recent surge in homes repossessed by lenders that is pushing inventory levels higher in recent months.
Banks are on pace to take back nearly 50,000 properties in Palm Beach, Broward and Miami-Dade counties this year, according to CondoVultures.com, a real estate consulting firm. Many lenders are careful to hold off listing those properties for sale all at once to prevent widespread price declines.
Sean Snaith, an economist at the University of Central Florida, expects more foreclosures to result from homeowners losing their jobs. And he said the sagging labor market likely will discourage potential homebuyers.
“You have to have a healthy labor market as a foundation for a healthy housing market,” Snaith said.
Another concern is the expiration of the federal homebuyer tax credits.
Buyers who signed contracts by April 30 and close by the end of September are eligible for the $8,000 and $6,500 tax rebates. But people who put homes under contract after April 30 don’t qualify.
While pending sales still are robust, demand for homes is expected to wane in the second half of the year. Fewer sales would keep the supply of homes elevated and ultimately hurt pricing, said Chris Lafakis, an economist covering Florida for Moody’s Economy.com in West Chester, Pa.
“Our forecast is that ... demand won’t be strong enough to work off the excess inventory fast enough to stave off future price declines,” Lafakis said. “But by this time next year, the worst of the declines will be over.”
Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.
WEST PALM BEACH, Fla. – Aug. 17, 2010 – The number of homes and condominiums for sale across South Florida has steadily declined over the past two years, an encouraging sign for the region’s battered housing market.
Still, industry observers worry about a sizable “shadow inventory” of foreclosed homes that could complicate any real estate recovery.
Broward County had 19,869 properties on the market in July, down 35 percent from July 2008, according to a multiple listing service report compiled by the Keyes Co.
Palm Beach County’s inventory of homes and condos slid 31 percent to 23,947 during the same period.
The supply of new homes being built in the two counties also has decreased sharply in the past two years, said Brad Hunter of the Metrostudy research firm in Palm Beach Gardens.
In 2005, sellers rushed to list their homes, hoping to fetch record prices during the housing boom. But the frenzy led to a collapse and prices plummeted.
Thousands of foreclosures and short sales have clogged the market ever since, giving buyers plenty of choices and little reason to pay top dollar.
“You won’t get price appreciation until you get the inventory in balance,” said Mike Pappas, president of Keyes. “We’re making great strides.”
Declines in homes for sale already have helped stabilize prices recently.
The median price in Broward rose 7 percent during April, May and June to $209,800 from a year ago, the Florida Realtors said Wednesday. Palm Beach County’s median increased at the beginning of the year but dipped 2 percent in the second quarter to $235,500.
Pappas said his firm is handling fewer transactions involving foreclosed homes, and he thinks that’s an indication the foreclosure market has peaked.
But some analysts disagree, pointing to a recent surge in homes repossessed by lenders that is pushing inventory levels higher in recent months.
Banks are on pace to take back nearly 50,000 properties in Palm Beach, Broward and Miami-Dade counties this year, according to CondoVultures.com, a real estate consulting firm. Many lenders are careful to hold off listing those properties for sale all at once to prevent widespread price declines.
Sean Snaith, an economist at the University of Central Florida, expects more foreclosures to result from homeowners losing their jobs. And he said the sagging labor market likely will discourage potential homebuyers.
“You have to have a healthy labor market as a foundation for a healthy housing market,” Snaith said.
Another concern is the expiration of the federal homebuyer tax credits.
Buyers who signed contracts by April 30 and close by the end of September are eligible for the $8,000 and $6,500 tax rebates. But people who put homes under contract after April 30 don’t qualify.
While pending sales still are robust, demand for homes is expected to wane in the second half of the year. Fewer sales would keep the supply of homes elevated and ultimately hurt pricing, said Chris Lafakis, an economist covering Florida for Moody’s Economy.com in West Chester, Pa.
“Our forecast is that ... demand won’t be strong enough to work off the excess inventory fast enough to stave off future price declines,” Lafakis said. “But by this time next year, the worst of the declines will be over.”
Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.
Saturday, August 7, 2010
Asians Find Attractive Buys in Britain and the U.S.
By ALEX FREW McMILLAN
HONG KONG — Darryl Dong recently took his wife, Eva, to New York for a bit of shopping. He had heard there were some great sales. But Mr. Dong, a financier based in Hong Kong, was not looking for designer clothes.
Instead, he picked up a two-bedroom, two-bathroom condominium on Sutton Place, an exclusive street between midtown Manhattan and the Upper East Side, for $2 million. He paid one-third less than the $3 million asking price, the price that a similar unit in the building had sold for in 2007.
Mr. Dong is part of a stream of buyers based in Asia who have become increasingly active in Western real estate, particularly in Britain and the United States, snapping up properties at what they consider to be bargain-basement prices.
“Now is a truly opportune time to buy London, New York, L.A. — all these markets are totally thrashed,” Mr. Dong said. “It’s not cheap per se, but for executives in Hong Kong looking for a second home, you can’t do any better than that. These are all prime markets that you would move in and out of in business circles anyway.”
Asian buyers have accounted for 49 percent of the investment purchases in London over the last 12 months, according to research from the Knight Frank real estate agency. Asian investors spent £761 million, or $1.2 billion, on property in the British capital, with investors coming from Hong Kong, mainland China, Singapore, Malaysia and other parts of Asia.
“While the market has returned to life after it pretty much shut down in 2008, current international investment demand is almost totally concentrated on London and is primarily coming from Asia,” said Liam Bailey, the head of residential research at Knight Frank.
Buyers say the weak pound, and the sense that London real estate is a secure investment, are the main attractions. And even though prices in the city have risen 22 percent in the 14 months that ended in May, prices in central London still were 32 percent off their peak in March 2008, in Hong Kong dollar terms.
Asian buyers favor central locations and properties near the Underground, Knight Frank says. For example, the extension of the Jubilee Line south of the River Thames is drawing Asians to Southbank and Canary Wharf.
Knight Frank says the Pan Peninsula development in Canary Wharf sold 110 units in Hong Kong and Singapore, at prices from £250,000 to £4 million, at an average of £800 per square foot. And developers like Barratt Homes, which is giving Asian buyers first opportunity to buy the 700 apartments in its £150 million Renaissance development near Greenwich, recently said Hong Kong and Singapore residents buy one quarter of all the homes it builds in London.
In the United States, buyers from China and Hong Kong are the fourth-most-active international purchasers, according to a report issued in June by the National Association of Realtors, following buyers from Canada, Mexico and Britain. The Chinese make up 8 percent but, with the British share slipping to 9 percent in recent years, they soon may be the most prominent buyers from outside North America.
For the 12 months that ended in March 2010, foreigners represented 4.5 percent of the buyers, who purchased $907 billion in U.S. real estate during the period. The proportion actually could have been larger, but one-third of all potential international buyers were unable to complete their purchases because of financing problems. Ninety-two percent of all U.S. buyers get mortgages, while only 45 percent of foreign buyers do.
Danny Lim, another investor based in Hong Kong, also traveled to the United States this spring to vet property. During that trip he bought properties in Detroit; Las Vegas; Fort Lauderdale, Florida; and Miami, paying cash for homes to rent out and to hold for investment.
Mr. Lim, who was born in Indonesia but grew up in Australia, plans to target Phoenix and parts of California next. “We identified five areas that we thought had really good potential and also the ones that were the worst hit in the credit crisis,” Mr. Lim, 34, said.
His company, The Creations Group, has established a small fund that is open to friends and family, and that so far has invested around $1.5 million of its $2 million in cash. If the venture is a success, he anticipates opening a larger fund to the public.
Working with local brokers, he targets lower-end housing a few streets away from good neighborhoods. But by stipulating that the properties be single-family homes, in good condition and producing a minimum rental income, he hopes to ensure a good return.
Other purchasers stick to high-end property. The median price paid by international buyers for U.S. property is $219,400, according to the Realtors’ survey, 27 percent higher than the median $173,000 price for all sales, including American buyers.
Mr. Dong, 52, used the O’Neill Group, a company with operations in Hong Kong and the United States, to broker his purchase. He secured a 30 percent loan on his Manhattan purchase. But he says financing “wasn’t an issue,” just as he did not worry about getting the best price.
“My philosophy has always been as an investor, it’s nice to buy something at the bottom but don’t chase the bottom,” he said. The market “has gone down far enough that any time along now that you buy, it’s going to be a great deal.”
Mr. Dong is the global head of distressed-debt investments for PineBridge Investments, the former AIG asset management arm now controlled by Richard Li’s Pacific Century Group. He is putting his work experience to personal use. In addition to the Manhattan purchase, last year he bought a four-bedroom, four-bathroom home in Mill Valley, California, for $2.5 million. He rents this out but eventually expects to use it as a home.
Mr. Dong, a Vancouver native, said he targeted the Bay Area and New York for personal reasons but would be equally upbeat about buying in London.
“How often does a confluence of circumstances create a situation where you have got a housing crisis, a global financial crisis, and in Europe you have got a debt crisis? That will never happen all at one time in our lifetime,” he said. “It’s a once-in-a-lifetime opportunity to buy in those places.”
HONG KONG — Darryl Dong recently took his wife, Eva, to New York for a bit of shopping. He had heard there were some great sales. But Mr. Dong, a financier based in Hong Kong, was not looking for designer clothes.
Instead, he picked up a two-bedroom, two-bathroom condominium on Sutton Place, an exclusive street between midtown Manhattan and the Upper East Side, for $2 million. He paid one-third less than the $3 million asking price, the price that a similar unit in the building had sold for in 2007.
Mr. Dong is part of a stream of buyers based in Asia who have become increasingly active in Western real estate, particularly in Britain and the United States, snapping up properties at what they consider to be bargain-basement prices.
“Now is a truly opportune time to buy London, New York, L.A. — all these markets are totally thrashed,” Mr. Dong said. “It’s not cheap per se, but for executives in Hong Kong looking for a second home, you can’t do any better than that. These are all prime markets that you would move in and out of in business circles anyway.”
Asian buyers have accounted for 49 percent of the investment purchases in London over the last 12 months, according to research from the Knight Frank real estate agency. Asian investors spent £761 million, or $1.2 billion, on property in the British capital, with investors coming from Hong Kong, mainland China, Singapore, Malaysia and other parts of Asia.
“While the market has returned to life after it pretty much shut down in 2008, current international investment demand is almost totally concentrated on London and is primarily coming from Asia,” said Liam Bailey, the head of residential research at Knight Frank.
Buyers say the weak pound, and the sense that London real estate is a secure investment, are the main attractions. And even though prices in the city have risen 22 percent in the 14 months that ended in May, prices in central London still were 32 percent off their peak in March 2008, in Hong Kong dollar terms.
Asian buyers favor central locations and properties near the Underground, Knight Frank says. For example, the extension of the Jubilee Line south of the River Thames is drawing Asians to Southbank and Canary Wharf.
Knight Frank says the Pan Peninsula development in Canary Wharf sold 110 units in Hong Kong and Singapore, at prices from £250,000 to £4 million, at an average of £800 per square foot. And developers like Barratt Homes, which is giving Asian buyers first opportunity to buy the 700 apartments in its £150 million Renaissance development near Greenwich, recently said Hong Kong and Singapore residents buy one quarter of all the homes it builds in London.
In the United States, buyers from China and Hong Kong are the fourth-most-active international purchasers, according to a report issued in June by the National Association of Realtors, following buyers from Canada, Mexico and Britain. The Chinese make up 8 percent but, with the British share slipping to 9 percent in recent years, they soon may be the most prominent buyers from outside North America.
For the 12 months that ended in March 2010, foreigners represented 4.5 percent of the buyers, who purchased $907 billion in U.S. real estate during the period. The proportion actually could have been larger, but one-third of all potential international buyers were unable to complete their purchases because of financing problems. Ninety-two percent of all U.S. buyers get mortgages, while only 45 percent of foreign buyers do.
Danny Lim, another investor based in Hong Kong, also traveled to the United States this spring to vet property. During that trip he bought properties in Detroit; Las Vegas; Fort Lauderdale, Florida; and Miami, paying cash for homes to rent out and to hold for investment.
Mr. Lim, who was born in Indonesia but grew up in Australia, plans to target Phoenix and parts of California next. “We identified five areas that we thought had really good potential and also the ones that were the worst hit in the credit crisis,” Mr. Lim, 34, said.
His company, The Creations Group, has established a small fund that is open to friends and family, and that so far has invested around $1.5 million of its $2 million in cash. If the venture is a success, he anticipates opening a larger fund to the public.
Working with local brokers, he targets lower-end housing a few streets away from good neighborhoods. But by stipulating that the properties be single-family homes, in good condition and producing a minimum rental income, he hopes to ensure a good return.
Other purchasers stick to high-end property. The median price paid by international buyers for U.S. property is $219,400, according to the Realtors’ survey, 27 percent higher than the median $173,000 price for all sales, including American buyers.
Mr. Dong, 52, used the O’Neill Group, a company with operations in Hong Kong and the United States, to broker his purchase. He secured a 30 percent loan on his Manhattan purchase. But he says financing “wasn’t an issue,” just as he did not worry about getting the best price.
“My philosophy has always been as an investor, it’s nice to buy something at the bottom but don’t chase the bottom,” he said. The market “has gone down far enough that any time along now that you buy, it’s going to be a great deal.”
Mr. Dong is the global head of distressed-debt investments for PineBridge Investments, the former AIG asset management arm now controlled by Richard Li’s Pacific Century Group. He is putting his work experience to personal use. In addition to the Manhattan purchase, last year he bought a four-bedroom, four-bathroom home in Mill Valley, California, for $2.5 million. He rents this out but eventually expects to use it as a home.
Mr. Dong, a Vancouver native, said he targeted the Bay Area and New York for personal reasons but would be equally upbeat about buying in London.
“How often does a confluence of circumstances create a situation where you have got a housing crisis, a global financial crisis, and in Europe you have got a debt crisis? That will never happen all at one time in our lifetime,” he said. “It’s a once-in-a-lifetime opportunity to buy in those places.”
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