From John Burns Real Estate Consulting, a company that is very thorough in their research:
http://realestateconsulting.com/betting-on-chinese-home-buyers-in-the-us/
I live and work in Irvine, California, which many consider to be ground zero for Chinese new home investment in the United States. In addition to everything else great about living in America, Irvine has fantastic schools, many new homes (Chinese have a huge preference for new over resale), a very well established Chinese culture, and is within one hour of Los Angeles International Airport. Some of the new home communities we have worked on in Irvine have sold more than half of their homes to Chinese buyers, and I am being conservative here. Prices often exceed $1 million, and frequently there is no mortgage.
Chinese interest in US housing is not confined to California, as our consulting team has noticed Chinese home buying in areas served by all of the major airport hubs. In South Florida, agents have been flying directly to China to compensate for declining demand from South America.
While the recent Chinese stock market correction has caused a decline in sales (one of my builder clients has noticed a sharp pullback, another just told me about a home sale cancellation specifically due to the buyer’s stock market losses, and one publicly traded home builder even mentioned the pullback on their earnings call.), our research has convinced us of tremendous Chinese demand to buy US real estate for their families and as investments.
Nonetheless, we remain very uncertain about the level of future Chinese home buying:
1. Is the number of people who can no longer afford to purchase a home after the stock market correction and currency devaluation greater or less than the number of people who will be encouraged to buy here by the stock market and currency instability?
2. How real is the economic growth, and is there underlying debt (as reported by the Wall Street Journal in December) that could cause Chinese wealth to unravel?
3. Will the government lift the $50,000 annual overseas investment cap later this year as anticipated, which could cause a flood of Chinese investment in US housing?
We don’t know the answer to any of these questions, but the future success of many new home communities depends on the answer. If you have some particular insight based on your knowledge of China, please let us know. We are constantly in search of new and better information.
Full article here:
http://realestateconsulting.com/betting-on-chinese-home-buyers-in-the-us/
Don’t pretend to have all the answers, but a lot of that wealth was from Chinese builders and real-estate deals.
Needless to say they did a bit of over building over there.
If I had to guess I would say there will be less of that wealth making its way here.
How about #3 – could that cut it loose again?
So you think it was seriously holding it back (#3)?
I just love reading the word ‘flood’
Perhaps we could poach some of Irvine’s flow. If the average Joe (or Li Wei) in Guangdong knew of the available hot tamales on offer, maybe he’d loosen up the pursestrings:
Top Ashley Madison registered female user zip code in San Diego–Carmel Valley. I should have paid more attention at those Carmel Creek PTA meetings. (Kidding, Honey…kidding.)
http://patch.com/california/delmar-carmelvalley/carmel-valley-torrey-pines-amongst-most-likely-neighb8b2a80e542
Seriously? You think some 5 digit regulation is preventing 8 digit sales?
I hate to sound provincial but I seriously suspect the new owner’s interests are not aligned with those of the community.
Might the recent turbulence in China cause some to quicken their pace to the exits? The 5 digit regulation change could give another way to game the system, and the people in panic mode exploit it to drain the account and come to San Diego and buy up everything.
I might be dreaming.
“quicken their pace to the exits? ” Maybe,
But from what I have been hearing the China Gov wants just the opposite, they want to stem the flow of money out of the country. The China Stock market push was an effort by the Gov to keep the money in the country.
The one thing I think the Gov will do at all costs is to keep the general population busy and satisfied, they want to avoid instability at all coasts.
If that involves building ghost towns, they will build more ghost towns.
Irvine is seriously an outlier – twenty years ago my high school senior class (University High, Irvine) was nearly 50% Chinese. And by Chinese I mean “went to Chinese school every Saturday, can speak and write Chinese, raised by Dragon moms.” There are other limited pockets in Southern California but Irvine is by far the most concentrated. So the article is both unsurprising and nothing new – the demographics have been the same for a very long time. Put another way, there were a dozen kids in my senior class living in Irvine without their parents – rich dad worked in China, bought a house for his kids in Irvine so they’d get a good US education and speak perfect English, attend a good US college, and then maybe return to China later to work.
Anyway, I’d be hesitant to make any argument about China and US housing based on Irvine. OTOH if suddenly half the buyers in NCC are all-cash ethnic Chinese you might have a new trend. But I suspect Irvine will double again in size before the Chinese start venturing into new-found SoCal territory.
Thanks Bode!
I would argue that point. Chinese have been buying Pasadena, arcadia and rolling heights for at least 10 years now, and are starting to but next to UCR the last few years.
Second generation can be found everywhere in Socal.
In one middle-income neighborhood, I’ve been noticing Chinese buying some pretty rank rental properties, and throwing in a ridiculous amount cash to refurb them.
I’ve seen ’em take some wasted 1920’s apartment complexes and make them look like museum curators refurbed them. They’re nothing short of awesome. I’ve seen no american refurb crew match the quality of work in that neighborhood or anywhere else. They must have standing crews doing this. It’s too fast, and too well done to be just hiring local contractors.
Anyway, they’re not just in the high-end areas, they’re making a definitive mark as investors in apartment complexes in middle-income areas, and they are organized.
Thanks daytrip – first I’ve heard of that!