For first time since NAR has tracked international buyers,
Chinese have moved to No. 1 spot
Takeaways:
·
Buyers from China have surpassed Canadians,
Europeans, Mexicans and Middle Eastern homebuyers as the top overseas
purchasers of home in the United States.
·
According to the Realtor data, 76 percent of
Chinese buyers pay cash.
·
In the past four quarters, massive capital
outflows from China have exceeded $450 billion.
Editor’s Note: This is the
first in a two-part series on international buyers in the U.S. housing market.
The first article will take a close look at the leading overseas purchaser of
U.S. properties — Chinese buyers.
In the 5,000 years of China’s history, never have so many
Chinese quietly moved so much money out of the country at such a fast pace.
Nowhere is that Sino capital flight more prevalent than the U.S. residential
real estate market, where billions are rapidly pouring into the American dream.
From New York to Los Angeles, China’s nouveau riche are going on
a house-hunting shopping spree.
This year, for the first
time since the National Association of Realtors has
tracked foreign buyers of U.S. real estate, buyers from China have surpassed Canadians, Europeans, Mexicans and Middle Eastern homebuyers
as the top overseas purchasers of home in the United States.
China’s
rise to the top has been nothing but remarkable. Chinese investment in U.S.
residential real estate has grown from a measly $50 million in 2000 to an
eye-popping $28.6 billion in the year ending in March 2015. That’s an increase
of 72 percent from a year earlier — double the amount spent a year earlier —
that surpassed all other foreign buyers.
For first time since NAR has tracked international buyers,
Chinese have moved to No. 1 spot
Takeaways:
·
Buyers from China have surpassed Canadians,
Europeans, Mexicans and Middle Eastern homebuyers as the top overseas
purchasers of home in the United States.
·
According to the Realtor data, 76 percent of
Chinese buyers pay cash.
·
In the past four quarters, massive capital
outflows from China have exceeded $450 billion.
Editor’s Note: This is the
first in a two-part series on international buyers in the U.S. housing market.
The first article will take a close look at the leading overseas purchaser of
U.S. properties — Chinese buyers.
In the 5,000 years of China’s history, never have so many
Chinese quietly moved so much money out of the country at such a fast pace.
Nowhere is that Sino capital flight more prevalent than the U.S. residential
real estate market, where billions are rapidly pouring into the American dream.
From New York to Los Angeles, China’s nouveau riche are going on
a house-hunting shopping spree.
This year, for the first
time since the National Association of Realtors has
tracked foreign buyers of U.S. real estate, buyers from China have surpassed Canadians, Europeans, Mexicans and Middle Eastern homebuyers
as the top overseas purchasers of home in the United States.
China’s
rise to the top has been nothing but remarkable. Chinese investment in U.S.
residential real estate has grown from a measly $50 million in 2000 to an
eye-popping $28.6 billion in the year ending in March 2015. That’s an increase
of 72 percent from a year earlier — double the amount spent a year earlier —
that surpassed all other foreign buyers.
Chinese
buyers made up 16 percent of international buyers. Canadians made up 14 percent
of overseas buyers. Mexican buyers ranked third, accounting for 9 percent of
foreign buyers.
NAR reports that overseas homebuyers spent a record $104 billion
buying U.S. homes this past year (ending in March 2015), with Chinese buyers
leading the pack. In the 2014 survey, foreigners spent $92 billion on U.S.
homes over a 12-month period, up 35 percent from a year earlier.
Chinese buyers are now the biggest international buyers of U.S.
real estate in terms of dollar volume, total units and average price paid, the
Realtor group reports. According to the Realtor data, 76 percent of Chinese
buyers pay cash.
Moreover, international buyers spent, on average, $499,600 on
their home purchases compared with the overall U.S. average home price of
$255,600. Chinese buyers spend the most, with an average price of $831,800 on
their U.S. home purchases.
According to JPMorgan Chase, massive
capital outflows from China have exceeded $450 billion in the past four
quarters.
William Yu, an economist at the UCLA Anderson Forecast, said
political and economic instability in China are growing concerns for wealthy
Chinese. He said Chinese investors are hedging their bets to protect their
wealth as the Chinese economy and the mainland real estate market shows signs
of instability amid a growing anti-corruption campaign launched by Communist
Party General Secretary and Chinese President Xi Jinping.
“China’s real estate market has peaked already,” Yu said in
a telephone interview. “Their housing bubble has popped. For economic and
political reasons, Chinese investors want to protect their wealth by
diversifying their assets, buying U.S. real estate and moving money out of the
country.”
Yu and other leading China watchers are sounding the alarm about
the stability of China’s economy.
One of America’s
pre-eminent China experts, David Shambaugh — a professor of political science
and international affairs at George Washington University — warned in a recent essay in The Wall
Street Journal that the “endgame of Chinese communist rule has now begun” and
the Communist Party’s possible “demise is likely to be protracted, messy and
violent.”
Shambaugh cited five phenomena to support his thesis; key among
them were that China’s wealthy elites are moving their assets overseas and many
are fleeing China or planning to do so soon.
In January, Michael
Auslin, of the American Enterprise Institute, wrote an editorial in The Wall Street Journal quoting
one of America’s most experienced China watchers who said, “I can’t give you a
date when it will fall, but China’s Communist Party has entered its endgame.”
“China’s economic elites have one foot out the door, and they
are ready to flee en masse if the system really begins to crumble. In 2014,
Shanghai’s Hurun Research Institute, which studies China’s wealthy, found that
64 percent of the ‘high net worth individuals’ whom it polled — 393
millionaires and billionaires — were either emigrating or planning to do so.
“Rich Chinese are sending their children to study abroad in
record numbers (in itself, an indictment of the quality of the Chinese
higher-education system),” Shambaugh said.
Shambaugh, Auslin, Yu and other Sinologists fear that China’s
economy is losing momentum — and millions of wealthy Chinese are voting with
their feet. Millions more will follow their steps if the economy stumbles with
many of them buying U.S. properties. And the NAR survey confirms the rising
capital flight.
Original
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