Chinese purchases of US homes rose 19 percent during 2013 to total $22 billion in housing purchases. The surge in spending made China the leading foreign buyers of US homes with 24 percent of US housing purchases by foreign buyers in terms of monetary value.
2013 was the first year that China took this top spot, pushing aside last year’s market leader, Canada. According to a report released this week by the National Association of Realtors, a US real estate industry group, Chinese investors paid on average $523,148 per property in the US, far surpassing the average price of $199,575 paid by US buyers.
In terms of transaction volume China ranked second to Canada, with 16 percent of US homes sold to foreign buyers were purchased by citizens of China or Hong Kong, with the Association grouping the mainland and its wholly owned free market subsidiary together in its survey.
California is a Chinese Favorite
As Chinese buyers flock to America, they are choosing California as their top target.
The survey indicated that the cities of Los Angeles, San Francisco and Irvine were China’s top choices, with 32 percent of homes sold to foreign buyers in the state going to investors from the mainland or Hong Kong.
Foreign Purchases of US Homes on the Rise
While Chinese were the biggest movers among overseas buyers of US housing, they were by no means on their own, with overall purchases of US housing by foreigners rising 35 percent last year, as many investors continue to see the US market as underpriced.
Total international purchases of American homes jumped to $92.2 billion, according to the NAR, an increase of $68.2 billion on the year before and $82.5 billion for the year ending in March 2012. Foreign clients made up about 7 percent of transactions in the $1.2 trillion US real estate market last year.
Canada, China (The People’s Republic of China, Hong Kong and Taiwan), Mexico, India and the U.K. accounted for approximately 54 percent of all reported international transactions. In that mix, Canada maintained the largest share of purchases with 19 percent, and China was second with 16 percent of foreign purchases.
China was also the fastest growing source of transactions four percentage points from last year, while Canada dropped four points. Mexico ranked third with nine percent of sales and India and the U.K. both accounted for five percent.
US house prices have increased 26 percent since March 2012, after tumbling 35 percent from their June 2006 peak, according to the S&P Case-Shiller Index of 20 cities.