The wave of Chinese buying houses in the U.S.
At 6 o'clock in the morning in Washington, many people are still asleep, and local news is still broadcasting to remind everyone to pay attention to product labels. Because of the trade war, many items from China may have to increase in price, but this will not affect Eric's customers in mainland China.
Eric Chen is the Asia Pacific Director of Rongfu Real Estate, the largest real estate company in the East of the United States. At this time every morning, he has started to open WeChat and communicate with customers proficiently. His WeChat friends are approaching the upper limit, and most of them are his customers and partners in China. According to the different housing needs of customers, Eric divides them into different groups, such as students, investment, self-occupied, etc., and he will find suitable real estate for customers all over the United States. Eric from Taiwan will use the Mandarin with a Taiwanese accent to answer customer questions through WeChat voice, and display housing information to customers far away in mainland China through WeChat videos and pictures. Due to the continuing popularity of Chinese buying houses in the United States, intermediaries like Eric who have language advantages and are familiar with the American market are becoming more and more popular.
"Customers from the mainland are already our largest customer base, and the market for real estate agents who can speak Chinese is in short supply. Even brokers who don't speak Chinese have begun to learn to use WeChat to communicate with customers." Eric said.
Mid-range housing purchases are mainstream
According to Zillow data, the top 10 target countries for Chinese overseas purchases in 2017 are the United States, Australia, Thailand, Canada, the United Kingdom, New Zealand, Germany, Japan, Malaysia and Spain. Relying on the advantages of education and economy, the United States has become the first choice for Chinese consumers to invest and educate to buy houses. According to statistics from the National Association of Realtors (NAR), Chinese buyers invested US$31.7 billion in US residential real estate in 2016, an increase of 16% compared to US$27.3 billion in 2015, and this figure was in 2012. Only 12 billion U.S. dollars. Among them, the average purchase price of Chinese buyers was 781,000 US dollars, ranking first.
The booming emerging middle class has become the main force in this round of house purchases. Juwai.com's "Chinese American Property Focus" research report shows that the average budget of Chinese buyers to buy a house in the United States is US$399,000, or about 2.68 million yuan. At this price, you can only buy 26 square meters in Dongcheng District, Beijing, but you can buy a villa of nearly 300 square meters in Orlando. With the recent soaring housing prices in third- and fourth-tier cities in China, the housing prices in Orlando, the United States, are even lower than some third-tier cities along the southeast coast. From the perspective of the distribution of buyers in the city, in 2016, except for Beijing, Shanghai and Guangdong, consumers from other provinces and cities accounted for 47.8% of the total consumers, and by 2017, this number rose to 54.1%.
"Our data shows that the middle-class purchases of houses in the United States have grown rapidly in the past two years, mainly driven by immigration and investment. Given that the return on investment in the United States is not high, most customers who invest in U.S. real estate are mainly engaged in asset preservation. Demand instead of focusing on the rate of return on investment." said Liu Zhen, head of the overseas real estate department of Lianjia.
Decreased increase in luxury home purchases
Data from New York and Los Angeles, the traditional American luxury home purchases, show that the sales of luxury homes worth more than 3 million US dollars have slowed down. Although the proportion of Chinese buyers has increased, the growth rate has slowed down greatly. According to data from Juwai.com, mainland Chinese buyers who purchased luxury homes of US$3 million and above in the United States accounted for 4.8% of global buyers in 2018, an increase of 1.5 percentage points from 2017. Liu Zhen believes that the growth rate of luxury home sales will further slow down. “Overseas property purchases began to grow rapidly in 2010. At that time, it was mainly used as a way for ultra-high net worth individuals to diversify their investment risks. It peaked around 2015 and has already slowed down. “Trend.” Luo Xuexin, director and CEO of Juwai.com, believes that most of the Chinese buyers who buy luxury homes at present are mainly for self-occupation, and the investment purpose is a minority: “At present, buyers of properties above 3 million US dollars are more for self-occupation. The proportion is as high as 83%.” Liu Yiqi, head of the International Department of Jones Lang LaSalle, believes that Chinese high-end real estate buyers pay attention to the surrounding landmark buildings, the location of the house and the surrounding environment when buying real estate.
Taking New York, a traditional luxury housing area, as an example, data from Utonfun.com shows that the market share of luxury homes with more than $3 million in the first two quarters of this year has decreased from 18% in 2017 to 16%. However, the percentage of Chinese buying properties over US$3 million has risen from 6.57% to 8.12%. Among them, the Upper West Side, which is adjacent to Central Park and across the river from New Jersey, has the highest average price and the fastest increase in transaction volume. This is because a large number of new properties entered the market last year, pushing up the average house price in the region by 10 percentage points, from 5.5 million US dollars to 6 million US dollars. Unlike traditional European and American consumers, Chinese are very interested in buying new houses.
However, the fastest growth rate of luxury homes last year was in Seattle, located on the west coast. According to data from Juwai.com, Seattle was the US city with the highest transaction volume of Chinese consumers last year. In 2016, Canada began to levy a 15% real estate purchase tax on foreign investors who go to Vancouver to buy a house. This has caused a large number of investors to turn to Seattle, which has beautiful scenery and better education and employment resources. Local media reports show that real estate developers from China have also come to Seattle to search for gold.
In Seattle's land near the Lake District, the average house price increased by 40% in a year. "For the wealthy in China, a $10 million house can see beautiful lake views and enjoy good educational resources, and the price is not so unacceptable for their cities, such as Beijing and Shenzhen." A local real estate agency commented, "My client likes it very much and thinks the price is very good."
Regarding the impact of the Sino-U.S. trade war on buying houses in the U.S., although U.S. media believes that the U.S. tariffs on building materials from China, such as aluminum and steel, will increase construction costs and slow the speed of housing entry into the market, which will slow down housing sales. slow. Eric is relatively optimistic: "Mid-low-priced home purchases in the United States will be limited by the trade war, and real estate purchases for investment or immigration needs may decline. In view of the current mainstream transactions, most of the properties below 1 million US dollars, and Many demands from education and immigration are not greatly affected by policies."
Liu Zhen believes that for ultra-high net worth individuals, if cash flow permits, many people may increase their purchases of American real estate to achieve the purpose of property preservation. "For many ultra-high-net-worth individuals, the trade war may affect their cash flow and thus their purchasing decisions; but if there is sufficient cash flow, considering the strength of the U.S. dollar, they may choose to increase investment in the United States. , It’s just the direction from buying luxury houses to commercial residences or apartments that are easy to rent."