The View | Why Chinese buyers are still a force to reckon with in California’s property market

While the ‘China shock’ has subsided, Chinese buyers still lead the pack in the dollar volume of US homes purchased and the average purchase price

Public schools and universities, high quality of life and a lack of scapegoating for rising home prices make California an attractive destination

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A home for sale for US$965,000 in Inglewood, California, on February 8. In the year to the end of March 2022, Chinese buyers paid an average of US$1 million per property, with 31 per cent buying in California and 58 per cent making an all-cash purchase, according to a recent survey. Photo: TNS

Published: 12:34pm, 25 Jul 2022

California, the most populous state in the United States, witnessed a surge in purchases of residential properties by Chinese buyers a decade ago. According to data from the California Association of Realtors, a record 8 per cent of homes in the state were sold to foreign buyers in 2013, a large percentage of whom were Chinese.

A paper published by the US Federal Reserve in June 2020, which analysed property transaction data in California, noted that the US real estate market experienced a “China shock” between 2007 and 2013. The study also identified a “home bias” in Chinese purchases, with acquisitions concentrated in areas historically populated by ethnic Chinese, in particular the San Francisco Bay Area.

Fast forward nine years and the shock has subsided. Foreign purchases of American homes, which peaked in US dollar volume terms in 2017 at US$153 billion, dropped to US$59 billion in the 12 months to the end of March 2022, according to data from a survey published last week by the National Association of Realtors (NAR).

However, while purchases by Chinese buyers fell sharply from US$31.7 billion in 2017 to US$6.1 billion, China remained the top foreign buyer in terms of the dollar volume of homes purchased and the average purchase price, the survey revealed.

Chinese buyers paid an average of US$1 million per property, with 31 per cent buying in California and 58 per cent making an all-cash purchase. Moreover, 52 per cent bought their home for use as a primary residence, with a further 8 per cent acquiring a property for student use, the survey’s findings showed.

In a sign that many Chinese buyers have settled down in the US and become more knowledgeable about the property market, 57 per cent bought homes in suburban areas. That is compared with 29 per cent in central business districts, the NAR found.

.css-1m2rp1p{color:#34b8b5;}The View | Why Chinese buyers are still a force to reckon with in California’s property market

The View | Why Chinese buyers are still a force to reckon with in California’s property market