Chinese Investment in U.S. Housing Market Continues to Surge
From the high rise condo towers in San Francisco and New York to suburbs from Southern California to the Bay Area, Chinese buyers are purchasing homes in the U.S. at record rates – and in many cases, for all cash.
The National Association of Realtors said in a new report that Chinese are now the top foreign buyers of domestic properties. Asian buyers accounted for 35 percent of all international purchases of U.S. real estate for the 12-month period ended in March 2015, spending more than $28 billion. Chinese buyers have been particularly active in high-end markets, such as New York City, the Bay Area and Southern California.
Nearly half of Chinese buyers are paying cash for the properties, according to RealtyTrac, a real estate analytics company. RealtyTrac reported that 46 percent of Chinese buyers paid cash for their U.S. homes so far in 2015, up a staggering 229 percent from a decade ago. That compares to 33 percent for all buyers overall, up from 65 percent a decade ago.
“Cash buyers across the board are playing a much bigger role in the housing market now than they were 10 years ago, and that is particularly true for Chinese Mandarin-speaking cash buyers, who are more likely to be foreign nationals,” said Daren Blomquist, vice president at RealtyTrac, in a recent news release.
“Foreign cash buyers have helped to accelerate U.S. home price appreciation over the past few years given that these buyers are often not as constrained by income as local, traditionally financed buyers.”
The amount of money Chinese buyers are pouring into U.S. real estate has been on the rise for a number of years, but recent instability in China’s economy and stock market has driven even more buyers to the U.S. In addition, education, health care and expectations of greater price appreciation are all enticing to Chinese buyers, analysts say.
Below is a market-by-market report from our local offices:
North Bay – The fall market is in full swing, reports our San Rafael manager. The Central Marin/San Rafael market appears to have returned to a normal market. There are more homes for buyers to choose as inventory is increasing and the pent-up demand appears to be leveling off. Open house activity is brisk in the under $1.5 million range, however higher priced homes are receiving fewer weekly and weekend viewings. He expects the San Rafael market to continue at a steady pace for the remainder of the year. The Sebastopol area market has experienced a noticeable slowdown in both sales and listings this period. Most agents have been in multiple offer situations and cash remains king when it comes to the winning offer.
SF Peninsula – There were 266 pending sales in San Mateo County reported in MLS during the past two weeks, according to our Burlingame North manager. Homes in near perfect condition and/or prime locations are still receiving multiple offers over the asking price. Homes that may have slight imperfections in condition, location or overpricing are staying on the market longer and may not get multiple or any offers. While values haven’t decreased they are stabilizing for these types of properties. These types of properties appear to be excellent opportunities for those buyers who were outbid in previous multiple offer presentations. There seems to be a slight shift in the market, reports our Redwood City-San Carlos manager. There is lower attendance at open houses and fewer offers on most properties, she says.
East Bay – Multiple offers are happening on most properties under $1 million if the house is priced aggressively, according to our Berkeley manager. If priced at the top of the range, the house is likely to sit on the market longer. She adds that she’s seeing the first signs of the Previews luxury market starting to cool down. Buyers are getting picky, she notes: they want a high-end house that is completely done. Finished houses are receiving multiple offers, but everything else is either getting one offer or none. The Lamorinda market continues to be steady.
Silicon Valley – Buyers are being more cautious and opportunities abound, according to our Cupertino manager. Our San Jose Almaden manager says the first half of October has started off slowly. The same happened in September but the second half of the month finished very strong. Agents aren’t seeing as many multiple offers, and sales prices in Almaden are showing the effects. Current average sales price in October for Almaden is $912,000, which is down 44% from last month. Blossom Valley and Cambrian are off to a better start. BV was just down 5% at an average sales price of $657,000 and Cambrian was just down 2% with an average sales price of $870,000. The Willow Glen market continues to have a steady inventory of active listings, currently at 60 active units. The market is experiencing a definite slowdown in new sales on a weekly basis. Most properties are now sitting up to 20-30 days before they see an offer or a price reduction from the seller. Open house traffic is still brisk, however buyer urgency is just not there on most properties. There still are multiple offers on select properties that go significantly over the asking price, but this is not the norm. Our Saratoga manager says the sense of urgency agents have been feeling from buyers for most of the year is waning. Multiple offers are not uncommon, but there are not as many offers on the same house.
South County – The Real Estate market in South County has slowed considerably from what it was just several months ago. There seems to be more listings, which provides potential buyers with more choices. With more choices comes the buyers’ reluctance to “over bid” on properties and in some cases, buyers are taking a “wait and see” attitude concerning a potential purchase. The buying frenzy that was the hallmark of most Bay Area markets has quieted to a slower more rational approach as buyers contemplate the merits of a home as opposed to how many other buyers were interested in that particular property. Agents are reporting that attendance at open houses continues to be strong, but that “lookers” seem to be outnumbering “buyers.”
Santa Cruz County – The inventory of homes on the market continues to decrease while the number of homes being sold has increased over the past month. There were 205 single family residences sold in September 2015, compared to 192 in September 2014. The number of single-family homes on the market was 454 in September 2015 compared to 547 in September 2014. The average days on market for September 2015 is 5 days shorter than September 2014 and demand for housing has stayed relatively strong. The inventory of Previews Properties has increased steadily in recent months. September 2015 had 187 active on the market compared to 182 in September 2014. The average days on market for Previews Properties was 64 for September 2015, five days shorter than September 2014. The number of sales was 42 for September 2015, up by 10 from September 2014. The number of new listings in September 2015 was 62, which is significantly up from September 2014, which had 40 new listings.