Chinese middle class is the new buyer of American residential real estate
Chinese consumers have been the top foreign buyers of U.S. residential real estate
Chinese consumers may have soured on some American products, like iPhones, but they have only sweetened on U.S. residential real estate.
They have been the top foreign buyers in both units and dollar volume of residential housing for six years straight, according to the National Association of Realtors, and now they expanding to new, lower price tiers.
Chinese consumers appear to be less interested in trade wars and more interested in bidding wars, according to San Francisco-based real estate agent Michi Olson, who just returned from an international real estate property show in Shanghai.
Olson said the Chinese are basically politically agnostic. Even though there is a great tension between U.S. government and Chinese, the Chinese citizen seems to be able to separate the political turmoil with the sound real estate investment.
She said the biggest difference this year is price point. Initially, it was wealthy Chinese buyers purchasing million-dollar properties, all in cash. Now more middle-class Chinese buyers are searching for lower-priced homes and they are using mortgages much more often.
Olson said the Chinese people still see the United States as a safe harbor where they can take their assets and park their money not only for their money but also for the future of their children.
Several lenders in the San Francisco area now specifically cater to Chinese buyers. The median price of a home sold to a Chinese buyer dropped from just under $530,000 in 2017 to $439,000 in 2018, according to the Realtors. And while California is still the favorite among Chinese buyers, they are now moving into markets in Texas, Georgia and Florida.
Laura Barnett sells real estate in the Dallas/Fort Worth area and sees healthy Chinese demand there. She said while most foreign buyers there still use cash, she is also seeing the shift to mortgages.
It is difficult to get loan approval on foreign buyers unless they put 50 percent or more down on a home, but several lenders specialise in this market now, so it is getting easier, said Barnett of RE/MAX DFW Associates.
As technology jobs spread across the U.S., it seems more Chinese workers in tech are starting to buy properties in new locations.
Olson has several Chinese clients whose children are already working at tech companies in California. Once they are settled, a parent will fly in from China with a down payment for a condo. That is happening now in other places.
For instance, Chinese buyers flocked to an open house in Long Island City in Queens, N.Y., just a week after Amazon announced it would open a new headquarters there.