Move over Canada.
China now tops the list of foreigners buying US real estate in terms of units purchased and dollar volume, according to a report from the National Association of Realtors, which tracks property purchases across the country.
For the year ended March 2015, out of a total of $104 billion in international sales, buyers from Chinese (People’s Republic, Taiwan and Hong Kong) purchased $28.6 billion worth of property, 30% more than the previous year. While it accounted for 28% of total sales, it was just 16% of number of transactions. This far exceeded the $11.2 billion bought by Canadians, the second largest group of foreign buyers with 14% of total transactions.
Five countries accounted for 51% of purchases by foreigners: Canada, China, Mexico, India, and the United Kingdom. Although Chinese buyers of American property overtook Canadian buyers in total transaction volume a year ago, they only overtook them in number of transactions in the latest 12-month period measured by the NAR report.
The average purchase price for international buyers was $499,600 per property, but the Chinese paid $831,800 on average, more than three times the national average transaction price of $255,600.
Buyers from China and India tended to buy in states with relatively high property prices. Their favorite spot was California, where they made 35% of the purchases. Other major destinations included Washington, New York, Massachusetts, Illinois, and Texas. About 39% of purchases were for residential purposes, and another 7% were for residences for students while studying in the US Canadians tended to buy in Florida and Arizona, areas with lower property prices.
About 69% of the Chinese purchases were reported as all-cash, compared with 55% for all international purchase and 25% made by US buyers.
“With the Chinese economy and real estate market slowing dramatically and a vociferous anti-corruption campaign in full swing at home, Chinese buyers have been scrambling in the past few years to buy real estate abroad,” said the Financial Times. It said they have become the biggest buyers of housing in many major English-speaking western cities with good education systems, excellent quality of life, strong rule of law and strong property rights, including New York, London, Sydney, Vancouver, Toronto and Auckland.
People involved in the market say the vast majority of money for overseas property purchases is transferred out of China illegally, said the FT.