Chinese buyers lining up for US homes
Updated: 2011-05-27 11:30
By Zhong Nan (China Daily)
BEIJING - Chinese homebuyers have become the second-largest group of international buyers of homes in the United States, according to a recent report from a realtors association.
Sales from Chinese homebuyers made up 9 percent of the $41 billion in international sales for US homes, according to an annual report released by the US National Association of Realtors. It is a considerable spike in sales from the 2007 mark of 5 percent for Chinese buyers, before the financial meltdown in 2008.
The report tallied the number of sales for 12 months starting from March of last year. In that span, buyers from 70 countries and regions purchased homes in the US. Canada, at 23 percent, ranked at the top of the list, followed by China at 9 percent and India, Mexico and the United Kingdom each raking in 7 percent of sales. The five nations accounted for 53 percent of transactions among international buyers, according to the report.
The total amount of property sales in the US over 12 months since March of last year was $1.07 trillion.
The report, from an association that represents 1.2 million realtors across the US, said the international property purchases were heavily concentrated in four states - Florida, Texas, Arizona and California, accounting for 58 percent of sales.
"Among these states, California has been an ideal location for Chinese homebuyers. Many buyers aim for residential properties, with some looking for bargain deals for business purposes," said Qi Lixin, president of the Beijing Entry and Exit Service Association, which helps Chinese people with issues of immigration and relocation and is supervised by the Beijing municipal civil affairs bureau.
Realtors who said they have experience with Chinese homebuyers said the main reasons for the increase in purchases from Chinese are the high property prices in China, the higher purchasing power of the yuan and the desire to immigrate.
"The yuan's appreciation has pushed wealthy Chinese to buy US properties, especially on the West Coast. This has encouraged many Chinese entrepreneurs," Qi said.
Other real estate agents, which predicted that Chinese buyers will make more deals in the US, attributes the EB-5 visa program, which provides foreign nationals a quicker way of obtaining a green card if they invest money in the US, to the rise in home purchases.
Zhou Lei, sales manager at San Francisco-based L.F. George Properties, said the program has attracted many affluent Chinese to settle in the US.
Zhou said the EB-5 visa has become a popular option for Chinese interested in obtaining permanent US residence for themselves and their immediate families. By investing $500,000 in a US government-approved business fund in order to create jobs in high unemployment or rural areas, investors can obtain a green card within two years. The investors do not have to manage the business in the US.
Zhou said a number of her Chinese clients are inclined to buy villas, bungalows and apartments close to universities and schools in the San Francisco Bay Area to give their children a better education with a local student's tuition rate.
The National Association of Realtors reported the average price paid by an international buyer was $315,000, compared to the US average of $218,000. Forty-five percent of international purchases were under $200,000.
Qi said a two-bedroom apartment in Beijing costs up to 2 million yuan ($300,000) while a two-bedroom apartment in San Francisco costs $350,000.
"The calculation is obvious," he said.
Zhang Yanyan, a realtor at Rodeo Realty based in Beverly Hills in southern California, said since 2008, she has seen more Chinese buyers came to the US to take advantage of the lower property prices that resulted after the housing crisis.
Zhang said most Chinese buyers prefer to pay for the entire price of the house in one installment of cash.
"The majority of my Chinese clients are well-established business people ranging in age from their 40s to early 50s," she said. "With an increasing number of Chinese coming to the US for education, more young Chinese graduates have also become homeowners in recent years."
As the number of Chinese buyers of US homes has increased in recent years, so has the number of affluent people in China. On the mainland, there were 960,000 millionaires with personal wealth of 10 million yuan or more, according to GroupM Knowledge, Hurun Wealth Report 2011. The total is a 9.7 percent jump from last year's aggregate.
Realtors said Chinese buyers tend to cluster in specific US locations based on their country of origin, shared experiences, business opportunities, local population, weather, the number of schools, hospitals and shopping malls. Many, they said, like living in big cities.
Chen Yongjun, a professor at the School of Business at Renmin University of China in Beijing, said "many Chinese buyers believe the US is a high-quality investment destination because it provides strong private property rights growth-oriented tax laws, liquid capital markets and a comfortable living environment for property owners".
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