The growing wealth of China and its citizens is resulting in more demand for residential properties in Southern California, according to a story in the Los Angeles Times which cites a report by the National Association of Realtors (NAR). Based on these figures, Chinese real estate buyers have money to spend and they are spending it.
Foreign buyers who reside overseas and in the U.S. accounted for $92 billion in home sales in the 12 months ending in March, NAR reported.
- That’s up 35% from the prior 12-month period, higher than the previous record of $82.5 billion set in 2012. These buyers purchased about 7% of all U.S. home sales by dollar value.
- The increase was fueled by a 50% increase in purchases from Chinese buyers, who bought $22 billion worth of U.S. residential real estate last year.
- The Chinese are the fastest growing group of foreign buyers in the US, moving from 9% of home sales in 2006-07 to 16% in 2013-14.
- Chinese buyers have focused on California, with their top three real estate markets Los Angeles, San Francisco and Irvine.
- Chinese buyers may see U.S. real estate as a better investment opportunity than what’s available in China, may be seen as a safe haven for cash and could be used as homes here for children attending U.S. schools.
Chinese citizens are not the only foreign buyers making purchases in Los Angeles. It’s the top choice for buyers of several other nationalities, including those from India, the United Kingdom, Australia, Ireland and Russia. For Mexican buyers, San Diego was the top choice.
Foreign buyers, on average, purchase homes which are far more expensive than the average price for a home sale. According to the NAR report,
- While the mean purchase price for a home was $247,000 nationwide, the mean purchase price for a foreign buyer was $396,000.
- Chinese purchasers are big spenders, comparatively speaking. The median average home purchase by a Chinese citizen is the highest of the top five nationalities making purchases, at $523,148. That is nearly $200,000 more than the next group, from the United Kingdom, at $350,000.
- The median purchase price by Chinese purchasers is in the highest 25% of prices of all homes bought by foreigners.
- While Chinese buyers were second behind Canadians in percentage of sales (19% v. 16%), they spent more money than any other group.
- One reason for this higher spending is their focus on higher priced areas of the country including California and New York.
Given the trade imbalances and amount of wealth that’s been transferred from the US to China, this shows that some of that wealth is coming back in the form of real estate sales. If you are a Chinese citizen living in Southern California and need help with business law issues or legal issues involved with investments required by the EB-5 permanent residency process, call my office at (800) 360-7001 so we can talk about your situation.