The Chinese appetite for American housing is sharper than ever, with Chinese topping the list of foreign homebuyers in the US for the fourth year in a row.
According to a recent survey of American realtors, people from mainland China, Hong Kong and Taiwan shelled out $31.7 billion for houses across the US during the 12-month period through this past March, as foreign investment in the country’s residential sector hit an all-time high.
The sales volume from the three locations exceeded last year’s survey ($27.3 billion), marking growth of 16.1 percent, and surpassed 2015 ($28.6 billion) as an all-time high. Chinese buyers also topped other countries in terms of the number of housing units purchased for the third straight year, grabbing 40,572 homes from coast to coast – up from 29,195 in the previous year.
Foreign Buyers Put $153B Into US Homes in One Year
The rise in Chinese home-buying came amid a 49 percent jump in foreign investment in the US housing sector year-on-year, mostly driven by Canadian purchasers, according to the survey by the Chicago-based National Association of Realtors. Foreign buyers and recent immigrants bought $153 billion worth of residential property in the US during the 12 months through March, rising from $102.6 billion in 2016 and exceeding the previous high of $153 billion in 2015.
California remained the most popular destination for Chinese buyers, with 37 percent of homebuyers from the group choosing the Golden State, the survey by the non-profit industry body found. Texas and Florida placed a distant second and third, attracting 11 percent and eight percent of Chinese house-buyers, respectively.
Chinese Have the Cash for Pricey US Homes
The median purchase price among all foreign buyers was $302,290, compared to the median price of $235,792 for all homes sold in the US. Chinese buyers far outspent other countries on the typical house, paying a median price of $529,900. “This can be attributed to the tendency of Chinese buyers to purchase residential properties in central cities and suburban areas with relatively higher property prices such as California, New Jersey, and New York,” the report noted.
Chinese like to pay for these domiciles in cold, hard cash. The report reveals that 65 percent of buyers from China made all-cash purchases, whereas 26 percent chose to take out mortgage loans from US sources, and four percent relied on mortgages from China – compared to 44 percent of overall foreign buyers plunking down cash.
Thirty-nine percent of Chinese buyers intended to use their new properties for residence, while 21 percent viewed the purchase as a residential investment, and 18 percent planned on both vacation use and residential investment.
Fleeing China’s Smoggy Cities and Bubbly Home Prices
Although Chinese home-buying grew significantly, most of the overall growth in US housing sales during the 12 months through March came from Canadian buyers, who snapped up $19 billion worth of homes, a massive increase from the 2015 figure of $8.9 billion. NAR attributes this hike in activity to fast growth in home prices in Canadian cities including Vancouver and Toronto that has outstripped price gains in the US.
Similar considerations apply to China, where an overheating residential market especially in first-tier cities has made US housing look affordable by comparison. New-home prices rose month-on-month in 60 out of 70 mainland cities in June, even though strict regulatory curbs dampened values in Shanghai and Beijing, according to official data. Nationwide, new-home prices rose 10.2 percent in June compared to the previous year. Home prices are also still climbing in Hong Kong, which retains the dubious title of the world’s most unaffordable housing market.
A recent survey published by China’s Hurun Research Institute found that the US remains the top destination of choice for high net worth individuals who are emigrating from China, trailed by Canada, the UK and Australia. Survey respondents, who have an average wealth of RMB 20 million ($3 million), named access to better education and a cleaner environment as the top motivators for packing their bags.
A separate report by Hurun earlier this year determined that almost half of Chinese “millionaires,” or people with a personal wealth of RMB 10 million ($1.4 million), were considering emigration.