When everything collapsed in the housing market here in 2008, US investors took advantage, knowing the situation wouldn’t last forever. But foreign investors also took note and jumped in.
The surprising player was China, however. Prior to 2010, investment from there was negligible but between 2010 and 2015, Chinese buyers spent around $93 billion on homes, condos and other investment properties! And finally, in 2015, those buyers surpassed Canadians as the predominant purchasers of investment properties here. I was astounded by this fact. (Springer, R. (2016, Sept-Oct.) Staying Power, Think Realty, pp. 12-14).
Interestingly, they tend to buy in our more expensive markets like New York City and California, although Texas and Florida are also high on the radar. And the trend is expected to continue. Why China?
- I didn’t realize this, but the government there doesn’t allow their people to own homes — they can only “lease” them from the government. (Ugh!)
- People there with extra monies see our dollar as more stable than their yuan, and also see our social and political landscape as much more stable than theirs.
- They like the rebound our real estate market has made in the past few years and expect that to continue.
China now has the highest number of billionaires in the world, and is second only to the US in the number of millionaires. They’re sending their children to universities here because they feel the education is superior, and there’s a federal program available (EB-5 Program) whereby a number foreign investors can immigrate here if they’ve bought real estate. Some of them purchase homes and have their children live in them while attending school.
So, it all makes sense on a number of levels. If you’re a Chinese national, have the extra cash and want to improve your investment portfolio … the US market holds a lot of opportunity.
(P.S. This isn’t a commentary on immigration! I don’t do political stuff on this blog, just real estate related content. Politics drives me crazy, especially right now … )