Chinese home buyers in the U.S. are flocking to the suburbs in full embrace of the American dream, unbowed by a slowing economy and falling currency at home.
For the second year in a row, a National Association of Realtors survey shows Chinese nationals—including ones from Hong Kong, Taiwan, and the mainland—dominating the ranks of international home buyers in the U.S., with purchases of 29,195 homes totaling about $27 billion from April 2015 through March 2016. The second-place Canadians bought 26,851 homes totaling only $9 billion, preferring vacation locales to homes in pricey suburbs, in states from New York to California to Washington.
Chinese buyers paid a remarkable $936,615 per home on average during the period, up from a not-too-shabby $831,761 a year earlier, and far more than the average $477,462 paid by all international buyers, according to the NAR. U.S. home buyers, by contrast, paid only $266,683 on average.
The dominance of Chinese buyers is “striking,” says Lawrence Yun, chief economist at the trade group. What’s more, about 71% of Chinese buyers pay these large sums in cash. That’s in part because of a lack of access to mortgage financing—it can take years for foreign buyers to build up the credit necessary to qualify—and in part because of a cultural tendency to save before making a big purchase, Yun says.
More:What to Know About Chinese Buyers in the U.S.
MANY OF THESE HOME BUYERS are recent immigrants, in the U.S. for two years or less, but they arrived well financed and ready to buy. That reflects a long-held preference of Chinese investors for tangible assets like real estate. They view home ownership “as a very important part of their dream in their newly adopted country,” Yun says.
Increasingly, Chinese buyers are taking this dream to the suburbs: Sixty-four percent of all homes bought in 2015-16 were in the burbs, up from 46% last year. Yun suspects that Chinese buyers, especially those with families, have realized that’s where most American families buy homes. There’s also anecdotal evidence that families with an eye on college for their children prefer well-heeled suburbs with quality public school systems.
And speaking of higher education, 13% of Chinese home buyers bought houses and condos for their children to use while at college in 2015-16, up from 7% last year. Many of these homes are spread throughout the country, away from the coasts, says John Wong, of the Asian Real Estate Association of America.
While the Chinese paid more on average for each home than a year earlier, they also bought fewer homes and spent less overall, the survey showed. This dip reflects China’s slower growth and—thanks to a 4% depreciation in the yuan—what amounts to a 10% hike in U.S. home prices for Chinese buyers. China’s efforts to keep capital from flowing out of its borders to the U.S. and elsewhere also play a role.
More:More Than 40% of All Foreign Buyers of Luxury Homes in the U.S. Are Chinese
The crackdown on capital flight is actually pushing more Chinese to consider buying property outside of China, says Wong. The restrictions “make it harder,” he says, “but the desire to buy property in the U.S. is even stronger.”
Such capital constraints may explain a notable statistic: Sixty-one percent of all Chinese home buyers in 2015-16 were U.S. residents, up from 53% a year earlier.
Slowing growth across the globe and a stronger dollar made a big dent in the affordability of U.S. homes for all nonresidents. As a result, nonresidents made only 41% of international sales in 2015-16, down from more than 50% in 2014-15. While international buyers bought 214,885 homes in 2015-16, 3% more than a year earlier, the total value fell slightly, to $102.6 billion from nearly $104 billion in 2014-15.
Sales to foreign buyers represented about 4% of all U.S. existing-home sales in 2015-16.
More:How Much Chinese Money Is Really in the U.S. Real Estate Market?
HERE ARE MORE HIGHLIGHTS from the NAR report:
• India was one of the better-performing economies, and Indians remain a strong presence among foreign home buyers, with $6.1 billion in purchases, or a 6% share. They spent $420,352 on average for a home. Indian buyers also are mostly U.S. residents.
• Buyers from Canada and the United Kingdom were mainly nonresidents looking for vacation homes in warmer climates.
• Fifty-one percent of all non-U.S. buyers flocked to Florida, California, Texas, Arizona, and New York. Among Chinese, a third bought in California, with many also turning to New York, Texas, New Jersey, and Washington. But the NAR says Chinese are the most widespread of any non-U.S. group, with 39% buying outside of those five states.