Fewer Chinese Buyers Shopping US Residential Real Estate

When I saw an article in the Wall Street Journal about Chinese buyers pulling back from purchasing residential real estate in the US, naturally I got curious about the reason.

Turns out, it’s them, it’s not us.
From March 2013 through March 2015 the annual investment made by Chinese buyers in US real estate (including commercial properties) spiked from 12 -13 billion to 28-29 billion. That’s a big jump, a long upward, 2-year trend on anybody’s graph.

But the Shanghai Composite Index, the primary barometer of stock trading in China, is currently down 38% since its high point in June 2015. That’s a downward trend of nearly 6 months, and apparently it’s influencing Chinese investors who may have had intentions to buy US real estate in the fourth quarter this year.

Despite the Chinese stock market downward trend, there are still two big reasons Chinese investors will continue to look at US real estate, especially residential properties: 1) They want their children to have a US address in order to attend colleges here, without being a foreign student, and 2) They consider US real property to be a “haven for savings,” unmatched in China or other parts of the world.

For these two significant reasons, real estate agents working with commercial and residential buyers from China are not worried about the current slowdown in the market.

Real estate for sale in the US is actually listed in Chinese on Juwai.com, so it’s easy for curious Chinese investors to find properties on their own internet search engines.

And despite the fact that Chinese investors are limited to approximately $50K per year flowing from their banks into US real estate, that hasn’t stopped them from finding ways to pay considerably more for their investments. In fact, the average sale of an existing home to all foreign investors, as of March 2015, is $500K.

Friends, relatives and legal entities of all kinds have been used to circumvent the $50K limitation during the buying frenzy over the last few years. But those techniques are getting harder and harder to employ. Apparently both governments, China and the US, are tightening restrictions on currency flow now. So, that’s another factor in the slowdown of Chinese investment in US real estate.

To bring it down to one individual’s personal opinion, the Wall Street journal quoted a 38-year-old father of an 8-year-old child, living in Beijing, “I see many problems with Chinese universities, and the environment and air quality here aren’t very satisfying.”

His budget for a home in the US is $1 million, and he’s sitting on the fence right now, but plans to hop off it and buy a house in Silicon Valley, as soon as the time is right.