Overseas home buyers and newcomers to the United States accounted for $92 billion in home sales in the year ending in March, which is up 35% from the previous year and higher than the previous record of $82.5 billion set in 2012. This represents 7% of all home sales in terms of dollar value.
The surge is attributed to Chinese buyers, whose spending increased 50% to $22 billion worth of U.S. real estate. According to real estate experts, Chinese investors view U.S. real estate as a better investment than what is available in China, while many have purchased homes for children in U.S. schools.
Chinese buyers paid $523,148 on average per property, compared to the average price of $199,575 paid by Americans.
Chinese buyers are flocking to Southern California real estate in particular. Los Angeles, Irvine and San Francisco were the three top destinations. Los Angeles is also a popular buying destination for other foreign buyers as well, including those from the United Kingdom, India, Australia, Ireland and Russia. For buyers from Mexico, San Diego was the city of choice.
Chinese and Canadian buyers accounted for 54% of international real estate purchases, with Canada the largest buyer in terms of transaction volume but China the largest in terms of dollar volume. 19% of foreign sales came from China while 17% came from Canada. Other major countries of origin for international sales included Germany, France, Brazil, Japan, India, Russia and the United Kingdom.
“We live in an international marketplace, so while all real estate is local, that does not mean that all property buyers are,” NAR President Steve Brown told the Los Angeles Times. “Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability and an incredible opportunity for investment in their future.”
The report found that international buyers usually buy higher-priced homes with a mean purchase price of international clients at $396 million, up from $354 million in 2013 but down from $405 million in 2012.
Chinese buyers typically buy properties in expensive markets such as Washington, California and New York while Canadians often opt for lower-priced markets such as Arizona.
The report also found that this increased demand may be a double-edged sword, as most purchases by foreign buyers are cash purchases, which can make it hard for first-time buyers to compete in the face of increased housing demand and limited supply.