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Increased Chinese Investment Continues to Boost Housing Sector

Published on Tuesday - May 07, 2013

Recent improvements seen within the housing sector may be attributed to the growing interests of foreign investors. Canada, in particular, continues to facilitate improvements within the United States housing market. However, recent trends have seen Chinese investment provide an encouraging boost to our economy as a whole. The Chinese have entrenched themselves as the second-largest foreign investors of U.S. housing, as they have spent approximately $9 billion in the past year. Increasing Chinese investment counts for 11 percent of the total amount foreign investors spent buying homes in America during that time.

China’s flourishing economy, in association with ever-increasing real estate prices, has made it increasingly difficult for investors to practice their trade in their home country. Subsequently, the Chinese government continues to strong-arm prospective real estate investments, as they aim to cool off the housing market. Recently instituted policies have forced Chinese investors to seek refuge overseas. As a result, large populations have migrated to the greater Los Angeles area, New York and San Francisco.

“The American real estate market began to rebound last year, and housing prices, especially in areas popular with the Chinese have been on the rise. Some houses even doubled or tripled in value,” Fu Yi, a Chinese real estate agent working in Los Angeles said. “I work until 9 every night, going with clients to see houses. Some call me in the middle of the night. I get even busier on weekends and holidays.”

Recent trends suggest that the Chinese are not only seeking investments, but also opportunities for themselves to reside within great neighborhoods. San Marino, renown for its highly accredited school districts and general wealth, has become a prized jewel for potential Chinese homeowners. Most Chinese who buy in this geographical region are not investing, but living there. Houses start at $2 million and better serve them for living purposes, other than investment purposes.

In Southern California, this is usually the trend among Chinese investment: Houses under $500,000 are usually purchased as investments to rent out; while houses priced over $1 million are usually bought for themselves to live in.

“For investment purposes, it’s best to buy houses below $300,000,” Fu said. “Any more expensive, the yield rate would be low. Buyers don’t need to consider school districts or whether the house is in a good area, they just need to know American housing prices are on the rise.”

Increased Chinese investment has banks and developers in Southern California catering to their clients’ every need. While cash is the preferred method of transaction for many Chinese investors, banks have begun to offer specialized mortgage loans to Chinese citizens. Developers have gone as far as implementing unique Chinese aspects into their development projects. It is not uncommon to see additional rooms on the first floor to accommodate elderly grandparents or two kitchens (Western-style and Chinese-traditional).

According Su Jiamin, an experienced real estate agent, Chinese citizens looking to live on acquired property usually congregate around areas with a higher concentration of their fellow countrymen. “40 percent of new Chinese immigrants in southern California choose to live in Greater Los Angeles, particularly in San Gabriel valley.” As a result, this particular area has experienced a significant jump in housing prices.

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