Chinese buyers are still #1, according to NAR

2018-07-27
China

Chinese buyers of US houses

Summary

The National Association of Realtors (NAR) published their new survey results for international activity in the US.  The key conclusion is that Chinese buyers remained the top foreign buyer of U.S. real estate Chinese buyers accounted for 15% of foreign buyer purchases during the period April 2017-March 2018. The number of Chinese foreign buyer purchases was essentially unchanged from 40,600 to 40,400. Chinese buyers spent  US$30.4B on residential real estate in the US while the next country, Canada, only purchased US$10.5B in real estate.

In effect, the shares to total foreign purchases declined for Canada (10%), Mexico (8%) and the United Kingdom (3%) compared to last year.

Average purchase price of a Chinese buyer

NAR’s 2018 survey results indicate that Chinese buyers were not as adversely affected by rising prices and dwindling inventory of homes at below $250,000, compared with other foreign buyers.  This is because Chinese buyers are more able to purchase higher-priced properties; the median purchase price among Chinese buyers during the reference period of the survey was $493,100, compared to the overall median foreign buyer price of $292,400. However, the median purchase price among Chinese buyers decreased to $439,100 from $529,900 (-17%). This suggests that Chinese buyers purchased properties in less expensive areas than they did in the past years or it may be due to the fact that Chinese have some challenges in transferring large amounts of money out of the country.

Where do Chinese buy real estate in America?

Based on the NAR report, transactions in California accounted for 37% of all Chinese transactions which is about the same as in 2017. 

How do Chinese buy real estate?

Chinese buyers tend to purchase real estate in the US using cash.  This explains why in, in certain cities, some local buyers find it hard to compete with this influx of Chinese money.

What is the forecast of Chinese investing in US real estate?

Experts believe that the Chinese interest for US real estate will remain strong over the next few years, and actually will increase in the medium term.  There are several reasons why Chinese continue to buy real estate in the US.  First, they continue to look for ways to get a foreign passport and a place outside of China to live.  Second,  they have the American Dream and will do anything possible to find a home in the USA. Third, Chinese parents believe in sending their child to American schools is a great investment and, as a consequence, these Chinese parents will need to buy a home for their child in the US.  Fourth, the pollution in China remains high which is driving many Chinese to look to the US to live.  Lastly, Chinese are increasingly getting wealthy and buying real estate in the US is a good way for them to diversity their assets.

Source: National Assocation of Realtors

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