The life of a realtor is not an easy one
Chinese buyers for U.S. real estate would now prefer not to.
Capping a five-year real-estate binge, Chinese nationals surpassed Canadian snowbirds as the top foreign buyers of U.S. homes for the year that ended in March—the most recent annual data—scooping up everything from $500,000 condos in New Jersey to $3 million vacation homes in California to $13 million Manhattan condos.
But in recent weeks, some Chinese buyers have started to pull back, scared off by China’s stock-market selloff, slowing economic growth, currency devaluation and tightened restrictions on capital outflows. On Friday, China’s benchmark stock index fell by 5.5%, its biggest daily slide since August, as Beijing authorities stepped up a crackdown on the securities industry.
Chinese and other foreign buyers have helped reshape the American real-estate market, driving up prices for homes in Southern California suburbs, skyscrapers looming over New York’s Central Park and residences in such college towns as Cambridge, Mass., brokers and economists said.
Buyers from mainland China, as well as those from Hong Kong and Taiwan, spent $28.6 billion in the year that ended in March on U.S. home purchases, according to estimates by the Realtors. While that accounts for just over 2% of American home purchases by dollar volume, the percentage is much greater in the high end of the housing market in such cities as New York, San Francisco, Los Angeles and, increasingly, Miami, according to the association.
Chinese residents began buying American homes in large numbers about five years ago, driven largely by growing wealth and a desire to safeguard savings against political instability, brokers and economists said.
American homes looked like a bargain after the real-estate crash, drawing busloads of Chinese buyers to see properties in California and Manhattan. To many, it seemed “a gold mine everywhere,” said Calvin Lo, a real-estate agent at Berkshire Hathaway HomeServices in Southern California.
To sate that demand, U.S. real-estate brokerages now hold conferences with thousands of attendees in China, and such Chinese property portals as Juwai.com, advertise U.S. properties and other country listings. “Over the long term, the stock-market gyrations reinforce preference for international investment,” said Simon Henry, co-founder of Juwai.com.
Chinese individuals are limited to annual overseas investments equal to about $50,000. For years, Chinese have surpassed that limit, in part, by funneling money through relatives and employees. In recent months, the government has made it tougher to transfer money abroad, said real-estate brokers in both countries.
“It’s like barbarians at the gate,” said John Chang, a real-estate broker with Re/Max in New York City. Chinese families want to buy, he said, “but they just can’t get the money out.”