As recently reported by Realtor.com, luxury homes are selling faster than last year with many selling at record or near-record prices per square foot. Chinese buyers are cited as a key factor in propelling prices higher.
The top foreign investors in America are now from China displacing Canadians as number one in dollars spent by foreign buyers of U.S. residential properties. These Chinese buyers, including investors from mainland China, Hong Kong, and Taiwan, purchased $22 billion in American residential real estate for the 12 month period of April 2013 through March 2014.
The average sale price to a Chinese buyer was about $591,000, considerably more than the average sales price in the U.S market overall of about $247,000.
According to the President of the National Association of Realtors, “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 total of international sales of about $92.2 billion is a year over year increase of about $24 billion.
Four states comprised 55 percent of total purchases by foreigners including Florida, California, Arizona and Texas. Florida had a 23 percent share of foreign purchases with California in second place at 14 percent, Texas had 12 percent and Arizona was responsible for 6 percent of purchases made by foreign buyers.
For 2014, according to the National Assn. of Realtors, the top five cities searched online by foreign buyers were Los Angeles, Miami, Las Vegas, Orlando and New York City.
The National Assn. of Realtors also reported that about 42 percent of the homes purchased by foreign buyers were bought as primary residences. Investments in U.S. real estate are viewed by foreigners seeking better protection, as a “safe haven” for their assets.
A recent survey by Barclays reveals that 47 percent of Chinese millionaires intend to move abroad in the next five years. That figure is the highest rate of planned millionaire flight in the world. Those leaving China report their top reasons for leaving China are to seek better educational and employment opportunities for their children, for economic security and for a desirable climate. The top destinations reported are Hong Kong, Canada and the U.S.
While Chinese investors think of U.S prices, even in the coastal cities of California as being relatively inexpensive, many Americans find prices too high and that they are priced out of the market.
The California Assn. of Realtors reports that all age groups, with the exception of those above 65, report lower incomes than at the height of the last real estate cycle in 2007. The current reported median sales price in Southern California is $420,000, up about 9 percent year over year. Last month’s median was the highest for any month since December 2007 (about the height of the last real estate cycle) when it was $425,000.
For a free consultation, contact Bess Hochman, a top Westside Real Estate Broker for more than 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys and others experts specializing in the issues referenced in this article. Contact Bess by phone at 310.291.4111 or email Bess.CenturyCityNews@yahoo.com.