What to Know About Chinese Buyers in the U.S.
The dollar volume and the number of properties bought by the Chinese are no doubt eye-popping. However, a closer look at the NAR 2016 Profile of International Activity in U.S. Residential Real Estate-which is based on a survey of about 6,000 brokers-reveals more interesting facts about Chinese buyers.
Here are five things the survey found.
1. Chinese buyers purchase more expensive homes.
On average, Chinese buyers are paying higher prices for homes than other international buyers. In 2016, the average purchase price for Chinese buyers was $936,615, nearly tripling what Canadians paid on average. Canadian buyers were the second largest buyers in the U.S. by both dollar volume and number of properties.
In terms of median purchase price, it was $542,084 for Chinese buyers, which means half of Chinese buyers bought properties valued above this price level. In comparison, the median purchase price for Canadians was $222,310.
2. They choose diverse locales.
About a third of Chinese buyers purchased residential property in California with New York, Texas, Washington, and New Jersey also being preferred destinations. However, roughly 39% of Chinese buyers purchased properties in locations other than these top five states.
3. They prefer New York to Florida.
Among foreign buyers from China, Canada, India, Mexico and the United Kingdom, only the Chinese chose New York as one of their top five markets in which to purchase. One in 10 Chinese buyers bought properties in New York. On the other hand, Florida — a popular destination for other international buyers — has yet to make it into the top five states for Chinese buyers.
“Other foreign buyers tend to buy vacation homes, where New York is not a top choice,” said Danielle Hale, Managing Director of Housing Research at NAR and co-author of the report. But Chinese buyers are drawn to New York for cultural similarities, job opportunities and the active housing market, she said.
4. They buy for their children.
A majority of buyers from Canada and the United Kingdom bought vacation homes for themselves, and almost none purchased a property to be used by their children who attend schools in the U.S.
On the other hand, about 13% of Chinese buyers bought properties “for use by student.” “This also explained why New York was one of the major destinations for Chinese buyers,” Hale said. “Some bought apartments for their children to go to colleges in New York.”
5. They are more likely to pay all cash.
About 71% of Chinese buyers paid all cash for their purchases while only 20% got financing from U.S. banks. In contrast, 90% of Indian buyers took out a mortgage loan from U.S. sources.
In terms of financing, Chinese buyers share a lot of similarities with Canadian buyers. The percentage of Canadians paying all cash was 73%, while 13% of Canadian buyers applied for mortgages from U.S. banks. And 4% of Canadians and 6% of Chinese took out loans from their home countries.
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