This may sound ironic, considering the “epic” crisis that the Chinese real estate sector has been struggling with for a long time, but the Asian giant’s accent is strongly heard in the US housing market. This was proven crystal clear by the American real estate brokers association NAR, which revealed in its sector report that the Chinese are by far the foreigners who spend the most dollars to buy homes in the US, and are in second place, sharing the position with the Mexicans in terms of the number of transactions. His goal: to own an apartment in California.

The most curious thing is that there is no specific trend.

Context to start withThe NAR data is interesting, but there are a few key points to consider before delving into it. First, its latest report is quite specific: It aims to calculate and better understand foreign investment in housing currently built in the U.S., focusing on the period between April 2023 and last March.

Another relevant fact is that when NAR speaks of “international or foreign buyers,” it takes into account both expatriates and recent immigrants, as well as “non-U.S. citizens.” In the latter case, its criteria are clear: it includes people who have been in the U.S. for less than two years before purchasing a home, or citizens with a visa who arrived in the country more than six months ago. As for operations, NAR tables are based on the assumption that each home corresponds to a buyer.

How much do foreigners earn? It’s actually a good amount, even though it’s less than 3% of the U.S. housing market, when you factor in the millions of sales of already-built homes that close each year in the U.S. and the billions of dollars that go into action. These transactions. The NAR estimates that foreigners have reached $42 billion in home purchases from April 2023 through last March. How many homes is that equivalent to? About 54,300, according to the association’s calculations.

These are strong numbers, but they are down significantly from the previous year. To be more precise, NAR estimates that the volume of money mobilized was 21.2% lower and the number of homes purchased by foreign customers was also down quite significantly, around 36%.

Interestingly (or not), this decline coincides with a significant increase in housing prices. The median value of transactions rose almost 22% to $780,300, with the median price remaining at $475,000. In both cases, these are the highest values ​​the association has documented since it began registering.

China’s footprint. With that data clear, the NAR study shows a particularly frequent emphasis among foreign buyers interested in the American housing market: China. By the number of transactions, but especially by the dollar volume those sales mobilized.

Chinese buyers spent $7.5 billion on homes already built, far ahead of Canadians ($5.9 billion), Indians ($4,100) and Mexicans ($2,800). The study also found that the previous year, that amount was even higher, at $13.6 billion, and that at its peak between 2017 and 2018, transactions closed with China would have exceeded $30,000 million.

6,000 housesIf we’re talking operations, Chinese buyers (a label under which NAR groups its customers from mainland China, as well as Hong Kong and Taiwan) purchased about 6,000 homes. The data puts them second to Mexican buyers.

At the top of the list are Canadians with 7,100 homes. The Chinese, beyond everything else and a special photo for 2024, have been showing interest in buying homes in the US for years: they were the foreigners who bought the most homes in 2023, 2020, 2018 or 2017, and they have been in the group for foreign buyers who have left more dollars in operations for 11 years.

How do they buy? The NAR report provides some insight into how foreign buyers who decide to buy a home in the U.S. behave. For example, 57% of buyers are U.S. residents, 50% pay cash, and 45% decide to buy or rent a home for vacation stays. The most coveted states are Florida and Texas.

Looking to California. Chinese buyers aren’t interested in the entirety of the United States. Their attention seems to be focused on two very specific states, California and Florida, which account for 25% and 19% of purchases in the country, respectively. New York, Nevada and Texas follow with more modest percentages. Other characteristics that define them when looking at the U.S. housing market are their interest in single-family homes and suburban areas. They also have the highest median purchase price: $697,900.

But… What is the reason for the fall? The NAR data reflects the Chinese’s weight among foreign buyers, but the main conclusion they leave is the general “distress” in both investment and operations. The key to explaining the collapse, according to the association’s chief economist Lawrence Yun, must be sought outside the real estate market and go to the relationship between currencies. There are also political factors affecting such operations.

“The strong dollar makes international travel cheaper for Americans, but it also makes housing in the U.S. more expensive for foreigners,” Yun notes. “It’s not surprising to see a decline in U.S. home sales by foreign buyers. Low housing inventory and rising prices continue to be factors limiting home sales for both U.S. and international buyers.”

Images | Braxton Apana (Unsplash) and Andrea Leopardi (Unsplash)

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