Where are Chinese looking to buy and why?

Chinese are buying houses in the USA

On a daily basis, we are receiving inquiries from US agents looking to generate leads from Chinese buyers. Furthermore, many Agents are trying to understand where the Chinese are buying in America.

The good news is that the US real estate market is the number one choice for many Chinese buyers. Based on the National Association of Realtors, Chinese spent $31.7 billion on American real estate.  That equals to a total of 40,500 units which is significantly more than the previous year.  Most of these units were single-family homes, and the majority of the purchases were made in suburban areas.  Lawrence Yun, chief economist at the National Association of Realtors (NAR) says that “many Chinese who grew up in the high-rises of those big cities in China see having a backyard as an attractive advantage.” The data from NAR shows that many Chinese are buying real estate in California and New York but are increasingly purchasing houses in Texas, Virginia, Florida and Indiana. Furthermore, we also see significant interest for Atlanta, Chicago, Boston and Seattle.

What are Chinese buyers looking for when buying a house in the US?

There are 3 major reasons why Chinese are buying a house in the US:

a)   Education: Our office in China is receiving hundreds of inquiries per week from Chinese buyers and the most common factor that we hear is education. Often, Chinese parents are looking to send their child to the US for studies, as early as primary school but most of them arrive for high school or college.  Knowing that most Chinese parents only have one child, they will make every effort to offer their child the best education that they can find in the US

b)   Immigration: the EB-5 program (a program that allows foreigners to obtain a greeencard via an investment in a project that creates American jobs) is very liked by Chinese nationals.  As a result, Chinese are representing the largest part of all EB-5 applications every year.

c)    Investment: more and more Chinese are feeling the need to invest in overseas countries due to a high real estate market at home in China and limited investments options available within China. As a result, US real estate investments that produce a decent rental yield or a good long-term appreciation are getting very popular with Chinese investors

How much do Chinese spend when they invest in a house in the USA?

On average, Chinese buyers spent $781,801 on a home in 2017—that’s more than $200,000 above the average spent by other overseas buyers.

However, there are some new regulations that were introduced early January to tighten the amount of funds that Chinese are able to transfer out of their home country. Over the last many years, it is known that Chinese buyers can not transfer more than $50,000 in a year. That has not changed but the regulation has become more tight now as banks need to ask Chinese what they are going to do with the money they want to transfer. Banks are instructed to deny transactions for overseas property purchases.

However,  Yun says the U.S. will not see a huge decline in foreign real estate purchases anytime soon, especially as China’s economy grows.