Miami’s South Beach in Florida. The state was the top destination for foreign buyers of US property (Source: Shutterstock)
The Chinese topped the list of overseas buyers of US homes for the 10th consecutive year, according to the US National Association of Realtors (NAR).
The NAR, which groups together buyers from the mainland, Hong Kong and Taiwan, said investors spent US$6.1 billion ($8.5 billion) on property purchases in the 12 months ended March, an increase of 27% from a year ago. Six out of 10 Chinese investors settled their purchases in cash.
Overall, foreign investors bought US$59 billion of residential units, up 8.5% from the previous year and snapping three consecutive years of declines, according to the NAR, which represents 1.5 million members in the residential and commercial real estate industries. International buyers accounted for 2.6% of the US$2.3 trillion property market during the period.
Foreigners acquired 98,600 existing homes, accounting for 1.6% of the total 6.12 million units sold in the period. It was, however, the lowest purchase by overseas buyers since NAR began tracking data in 2009.
“For the second year in a row, restrictions and general caution tied to international travel during the pandemic slowed home buying by wealthier foreign buyers,” says NAR chief economist Lawrence Yun.
The Chinese have been the largest foreign buyers of US homes since 2013, NAR says. In the last 10 years, Chinese investors have bought US$188.6 billion worth of property, accounting for over a fifth of the total US$906.2 billion investment in the period.
Meanwhile, the increase in US home prices pushed the average and median prices among international buyers to record highs of US$598,200 and US$366,100 respectively. The monthly average existing-home sales price in the US during the period rose 10% to US$374,300.
The average purchase price of Chinese buyers of just over US$1 million was the highest among foreign buyers, with nearly a third purchasing property in California.
The Golden Gate Bridge in San Francisco, California. The US state was the most popular destination among property buyers from China (Photo: Shutterstock)
More than four out of every 10 international buyer transactions were made via all-cash purchases, nearly twice the rate of all such acquisitions. The Canadians were most likely to acquire homes through outright cash purchases, with seven out of 10 paying cash. They were followed by the Chinese at 58%.
While rising interest rates are likely to lead to a decline in overall home sales in the US this year, foreign buyers are likely to step up purchases, says Yun.
“Those making all-cash offers will be immune from changes in interest rates,” he says. “In addition, international flights have increased in recent months with the lifting of pandemic-related travel restrictions.”
For the 14th straight year, Florida was the top destination for foreign buyers, accounting for about a quarter of all overseas purchases.
Florida is the power base of the Republican senator and former presidential contender Marco Rubio, one of the party’s biggest China critics.
Among the 96 Rubio-sponsored bills that have been enacted into law are the Uygur Human Rights Policy Act of 2020, the Hong Kong Human Rights and Democracy Act of 2019, and the Secure 5G and Beyond Act of 2020, according to data from the US Congress.
California came second, netting 11% of all investment, followed by Texas, Arizona, New York and North Carolina. California and New York were the preferred destinations for two out of every five Chinese buyers.
The outlook for Chinese investment in US property is uncertain, according to Kashif Ansari, co-founder and group CEO of Juwai IQI, pointing to the strengthening dollar.
“It remains to be seen if the almighty US dollar, which has appreciated more than 6 per cent against the Chinese yuan, can stem the investment flow,” says Ansari.