By Don Lee and David Pierson
CARAVANS of cash-rich Chinese in Hummers and Lincoln Navigators have been weaving through US neighbourhoods in recent months, looking for foreclosures and other bargain properties to buy.
With housing prices crashing in the US, home-buying trips to America are becoming one of the more popular tour group packages in China. New US visa rules for Chinese tourists and a loosening of foreign investment policies by China have made it easier for people such as Zhao Hongjun of Beijing to go house hunting.
The 48-year-old owner of a media company went on a two-week road trip through the US last northern autumn, visiting scenic sites and checking out properties from Los Angeles to New York. He has been following the swoon in prices ever since, and next month is considering joining another prospecting group that is heading for San Francisco, Los Angeles and Las Vegas — three of the hardest hit housing markets in the US.
Mr Zhao's budget: $US1 million ($A1.5 billion).
"LA is not bad; a lot of Chinese live there," he said, saying that he was interested in apartments and detached houses.
The tours are a new twist on an old phenomenon.
Overseas Chinese have been buying southern California properties for years. What's different now is that they are starting to do it in large groups and openly.
"Before it was kind of private, a quiet thing among friends," said Jamie Lee, a Chinese-American who runs the Los Angeles Convention and Visitor's Bureau office in Beijing. "Now it's full blown … It's huge. (Some of these groups) are talking about going every two weeks."
Chinese home-buying missions in the US are part of a broader trend of individuals and businesses in China seeking greater investment opportunities abroad. Next week government and business officials from China's southern Guangdong province will be arriving in Los Angeles to create a regional chamber office.
Real estate tours could help rev up sales in some places, especially those that are home to large Chinese-American communities.
Ling Chow, president of the Chinese American Real Estate Professionals Association in southern California's San Gabriel Valley, says brokers and agents welcome the mainland tours — anything to shake the doldrums of the market.
But Mr Chow, who serves mostly mainland Chinese buyers, is more sceptical about new waves of Chinese home buyers making a significant imprint. Unless they're willing to spend more than $US400,000, they are likely to be disappointed. Chinese are culturally inclined to buying new houses and prefer high-achieving school districts, demands that drive up prices.
Mr Chow said Chinese buyers' affinity for paying in cash would benefit them during the credit crunch. Many of her mainland clients have paid with cash.
The buying tours in the US grew out of similar trips by well-heeled Chinese back home. Investors from Wenzhou and other entrepreneurial hotspots were known for chartering buses into cities such as Shanghai to shop for apartments. Now some are signing up with outfits such as Soufun.com, the real-estate website sponsoring the home-buying trip next month from Beijing to California and Nevada.
Liu Jian, chief operating officer at Soufun Holdings, said his group's tour would focus on houses costing between $200,000 and $300,000, just at or below the median for the region. More than 300 people have registered for the trip, which could last 10 days and cost each person about $2200 excluding airfare.
"Many of them want to buy because they have actual needs to live there or for their children," Mr Liu said. "They will hold the property for quite a long period."
James Chou of Coldwell Banker George Realty in Alhambra, California, said he was preparing for several groups from China early next year. His company will provide hotels and tour buses.
Mr Chou said the potential investors were keen to see foreclosed homes, but he warned that it would be difficult to educate them about the house-buying process in such a short time. He said they had little understanding of single-family houses, coming from a country where most live in urban apartments.
Ms Lee, of the LA Convention and Visitors Bureau, has mixed feelings about these "gou fang tuan," or home-buying groups. She says they will be staying and eating and shopping in Los Angeles, pumping dollars into the local economy.
Ms Lee has been working hard in China to publicise Los Angeles' attractions — its weather, beaches, Hollywood and theme parks.
"I'm promoting tourism to LA, but not to go to buy cheap houses," she said. "Are we that desperate?"
Mei Xinyu is ambivalent for a different reason. As a researcher for China's Ministry of Commerce, Mr Mei doesn't want to see a rush of Chinese buying houses in the US and getting burnt.
"The housing price now in the US is fairly low already but it's hard to say how long it will remain in the valley," he said.
Chinese investors, Mr Mei added, should be careful to study the markets before plunging into them. In some places, they could face a backlash, just as when the Japanese went on a shopping spree in the US in the 1980s. What is more, he warned, some US cities might not bounce back at all.
"China is still in the process of urbanisation. It's unlikely to turn into ghost towns," he said. "But the US is different."
Yuan Lixin says his group's tour to the US is meant to deal with that concern — to give Chinese visitors a deeper understanding of the real life of the US over 14 days, before they buy real estate there.
"What we sell is the culture, American culture," said Mr Yuan, a planning department official at Beijing Youth, a newspaper enterprise that has organised group tours to the US since late 2006.
"Now because of the financial crisis, ordinary people in China also are starting to make large purchases in the US," Mr Yuan said. "In the past, people who travelled to the US might carry back a large luggage with American goods. It's just that this time, what they bring back are (papers showing) hundreds of thousands of dollars of a house."
LOS ANGELES TIMES