Chinese paying cash for US homes

By Chen Jia in San Francisco (China Daily)

A property project from Detroit promotes itself at a real estate show in Beijing in April. Wu Changqing / for China Daily
A ne
w wave of buyers from China is injecting billions of dollars into the US residential real-estate market.
Chinese investors spent $12.3 billion on US real estate over the 12 months ending March 31, according to the latest data released by the National Association of Realtors (NAR).
When Chinese housewife Alice Zhang of California saw a house in her neighborhood advertised for $1.23 million, she told her husband, “Nobody will buy that house quickly at such a high price.”
One week later, they were surprised to hear that the single family home in Silicon Valley had been sold and their new neighbor was from China.
“This house was definitely a bargain at under $1.1 million just six months ago when we purchased our house,” Zhang told China Daily.
“Our new neighbor paid cash, and that’s why the owner made the decision to sell so quickly,” she said.
Over the past year, foreigners made $68.2 billion worth of real estate purchases in the US, 18 percent of which were Chinese, according to the NAR.
The median price of homes purchased by Chinese was $425,000, higher than all foreign buyers’ median of $276,000.
Some 70 percent of the Chinese buyers used cash to pay for their homes in the US, according to a report on CNN on Monday.
An official with the Asian Real Estate Association of America (AREAA) said she didn’t see any increase in the number of Chinese buyers who chose mortgages, due to the strict examination process at US banks. “I have seen more and more Chinese house buyers come with cash,” said Huang Jiaying.
“Chinese clients are definitely asking about mortgages now and we have access to certain banks who will work with them. But most of the US banks are still unable to make loans to foreigners,” Huang said.
“I signed about 30 pieces of paperwork via an agency for a $800,000 house purchase in north California last month, but I failed to get the contract, as my offer was 50 percent bank mortgage ,” a 26-year-old Chinese IT engineer, who declined to be identified, told China Daily.
He said his competitors were mostly from the Chinese mainland offering to pay in cash.
People were still talking about the story last summer of a Chinese couple who spent $34.5 million on a Versailles-style mansion in Beverly Hills, Los Angeles. Another Chinese businessman reportedly paid around $28 million for an estate.
“More and more house owners in California are holding on to their estates waiting for prices to go up,” Kelly Wong, a Silicon Valley citizen, told China Daily. “The competition for foreign buyers is getting dramatic.”
Wong has two houses in California and she expects their market prices to increase more than 30 percent this year.
Earlier this year, Bloomberg reported that home prices in 20 United States cities rose in the 12 months prior to November by the most in more than six years, it said.
Joan Brothers, president of New York-based Manhattan Global Properties, said 50 percent of her clients are international buyers, many of them Chinese.
In previous years, the Chinese buyers were more like “lookers” than “buyers” and there was always a lot of “talking”, she said. “They understood that there was value in purchasing real estate, but did not always want to commit.
“Recently they have begun to follow through and make more purchases, and their preferred payment method is cash,” she said, adding that Chinese buyers have always been a “smart and savvy crowd”, who mostly purchase US property for three reasons: to have another asset out of China, because they have a child going to school in the US, or for business.
Hu Haidan in New York contributed to this story.

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