A Look at the Impact of China on the U.S. Real Estate Market in 2017

Foreign influence on the U.S. real estate market can be a challenging concept for many to grasp. There are numerous factors that influence real estate pricing locally, and foreign investment from buyers across the globe is a leading consideration. Chinese buyers, in particular, are a leading influence across the country. In this latest article, Stanfield Real Estate look at the Chinese influence on the U.S. real estate market, and delve into the industry data highlighting the potential changes in the market in future.

WHAT MOTIVATES CHINESE BUYERS TO INVEST IN THE U.S.

The latest data from the National Association of Realtors shows Chinese buyers invested $27.3 billion in the U.S. real estate market between April 2015 and March 2016. To learn why Chinese buyers are placing their money into the market, it’s important to know more about the motivations behind the individual. Below are several factors that influence the investment of Chinese buyers in the U.S. housing market:

Quality of Housing
The demand within mainland China for quality housing has outstripped the ability for companies in the country to respond. The country simply doesn’t have the quality of construction required to support the interests of the majority of their population. And the data shows that the average Chinese home building lifespan is just 35 years, compared to 74 years in the U.S. Chinese buyers are seeking a stable, quality home built by respectable firms.

Investment Security
The global consultancy firm AT Kearney ranks the U.S the leading destination for investors due to its clearly-defined legal system and investment framework. Owning in the U.S. also allows freehold ownership for Chinese buyers, who can only obtain a 70-year lease on residential properties in their home country.

IMMIGRATION OPTIONS
A LEADING REASON FOR THE RECENT INVESTMENT IN THE U.S. REAL ESTATE MARKET HAS BEEN THE AVAILABILITY OF IMMIGRATION OPTIONS FOR CHINESE BUYERS. THE U.S. OFFERS THE EB-5 PROGRAM, WHICH GIVES INVESTORS GREEN CARDS TO LIVE IN THE COUNTRY. IMMIGRATION OFFICIALS ALSO INCREASED ACCESS TO MULTIPLE ENTRY VISAS FOR UP-TO 10 YEARS, PRESENTING OPPORTUNITIES TO STAY IN THE U.S TO MILLIONS OF PEOPLE THROUGHOUT CHINA.

WHICH LOCATION IS MOST COMMONLY CHOSEN BY CHINESE HOME BUYERS?

In analyzing the potential for pricing changes, buyers should have a clear insight on the buying trends. California is a location in which there is great continued interest from Chinese buyers. In Q3 2016, California was the most top viewed areas for Chinese buyers seeking housing in the U.S. There are a number of reasons for the region’s popularity, including:

• – California’s first-class education
• – Home to world-class universities such as Caltech and Stanford, California has become a hub for Chinese families. The Chinese culture emphasizes education and having quick access to the world’s leading universities is a highly-rated feature for the California real estate marketplace.
• – Large Chinese population
  California already has a large Chinese population, with cities such as San Francisco and Los Angeles having welcomed millions of Chinese immigrants over recent years.
• – Lifestyle

Few areas of the U.S. can compare with California in terms of lifestyle comfort. The state is known for its warm weather, beautiful sights and diverse cultural groups. The area offers a prized lifestyle millions of Chinese have discovered through watching U.S. movies filmed throughout Hollywood.

THE FUTURE OF CHINESE INVESTMENT IN THE COUNTRY

While some might have predicted that President Trump’s harsh rhetoric on Chinese investment might dissuade others from moving to the country, the data shows this is far from the case. The Juwai US Presidential Election Survey found that 25% of property investors believed a trump presidency is unlikely to affect Chinese investment across the country. While 54% of U.S. real estate experts believe Chinese investment in the U.S. real estate industry will increase under President Trump.

The link between China and the U.S. and the continued role of Chinese buyers in the U.S. real estate market is set to remain strong over the coming years. If you’re interested in learning more on the factors that influence real estate pricing, as well as on the latest trends in your local marketplace, contact our team today at 949.392.5600.

Reference:
1. http://www.cnbc.com/2016/07/06/foreign-buyers-flood-us-real-estate-but-buy-cheaper-homes.html
2. https://list.juwai.com/news/2016/12/7-reasons-why-chinese-real-estate-buyers-still-love-the-us
3. https://www.atkearney.com/gbpc/foreign-direct-investment-confidence-index
4. Juwai.com US-China Real Estate Report 2016
5. https://list.juwai.com/news/2016/11/juwai-releases-us-presidential-election-survey-findings