Buyers from Greater China, including people from Hong Kong and Taiwan, spent $22 billion on U.S. homes in the year through March, up 72 percent from the same period in 2013 and more than any other nationality, the National Association of Realtors said yesterday in its annual report on foreign home purchases. That’s
24 cents of every dollar spent by international homebuyers, according to the survey of 3,547 real estate agents.
Chinese purchases of U.S. homes are likely to continue increasing as the country’s swelling ranks of affluent consumers seek refuge from pollution and political and economic uncertainty, according to Thilo Hanemann, who tracks cross- border investment for the New York-based Rhodium Group.
“A lot of people are trying to hedge against a generally bearish outlook for the Chinese economy,” Hanemann said in a telephone interview. “Buying real estate overseas has been in the past limited to a relatively small group of wealthy individuals and sometimes government officials. But it’s become a much bigger trend, involving affluent middle-class people.”
Chinese buyers paid a median of $523,148 per transaction, compared with a U.S. median price of $199,575 for existing-home sales. While Canadians bought more houses than the Chinese, they spent less — a median of $212,500 per residence, for a total of $13.8 billion.
Publicly traded builders are to responding by catering to Chinese buyers in areas with high demand. Brookfield Residential Properties Inc. staged feng shui blessing ceremonies before beginning work on projects in Anaheim and Foothill Ranch communities in Orange County, south of Los Angeles. The New Home Co. consulted with a feng shui master on the land plan for its Orchard Park development in San Jose, California, that opened in April.
Buyers from China are driving up prices and fueling new construction in Southern California areas such as Arcadia, a city of about 57,500 people with top-rated schools, a large Chinese immigrant community and an array of Chinese restaurants and markets.
The median home price in Arcadia’s 91006 ZIP code was $1.28 million in May, up 18.5 percent from a year earlier, according to research firm DataQuick.
“About 90 percent of my buyers are from China,” said Peggy Fong Chen, a broker with Re/Max Holdings Inc., who sold 80 homes in Arcadia last year. “They want new construction. They want two levels. In China, it is considered a mansion if it has two levels.”
More than three out of four buyers pay cash, said Chen, a native of Hong Kong who’s been selling real estate for 10 years.
At least 20 percent are absentee owners who don’t have long-term visas yet. Many purchase houses for their children to attend high school or college, she said.
Almost half of the buyers paid cash for houses in the development, at prices starting at $1.16 million, he said. The company has been surprised by how word travels among overseas buyers.
“A Chinese national bought one of our houses at Arcadia in Irvine after reading about it on a blog,” Tri Pointe CEO Doug Bauer said in a telephone interview. “It was a Chinese blog. We couldn’t even read it.”
Hui Hui Huang, a Taiwanese lawyer based in Shanghai, agreed last week to buy a five-bedroom Tri Pointe townhouse in San Mateo, near San Francisco International Airport, for $1.38 million. She and her husband were looking for a U.S. home as they develop a smartphone app to help diabetics better monitor insulin levels.
“We said, ‘wow, this is really attractive and serves our needs,’’ said Huang, 39, who went to law school in San Francisco with a classmate who also bought in the project.
Even as prices climb, U.S. real estate remains a relative bargain for Chinese investors, according to William Yu, an economist at the University of California at Los Angeles’s Anderson School of Management.
Two-bedroom condominiums in Shanghai’s Pudong district cost about $1 million, almost twice as much per square foot as condos in West Los Angeles, according a report by Yu last month. The Pudong units command $1,400 a month in rent compared with $3,300 in Los Angeles.
‘‘From an investor’s point of view, it’s better to be a landlord in L.A. than Shanghai,” Yu said in a telephone interview. “If you compare the rent-to-income ratio, it’s much better in Los Angeles than Shanghai.”
Some wealthy Chinese have come up with ways to evade the yearly $50,000 per-person limit on taking money out of the country so they can buy U.S. real estate, Yu said. Methods include laundering money through Macau casinos and cooking the books of import-export companies, he said.
“A lot of people over-invoice export proceeds, so they can park some money outside,” Ha Jiming, chief investment strategist for Goldman Sachs Group Inc.’s China investment management division, said at a Los Angeles conference in April.
Sales of U.S. houses to long-term foreign residents and non-resident buyers accounted for about 7 percent of the $1.2 trillion of existing-home transactions in the year through March, the National Association of Realtors said.
Chinese and Canadians were followed by buyers from India and the U.K., with investors from each of the countries spending
$5.8 billion on U.S. homes. Mexicans spent $4.5 billion, making them the fifth-largest international buyer group.
The share of money arriving from China is likely to keep growing, according to Lawrence Yun, chief economist for the Realtors.
“It’s just the beginning of a tidal wave,” he said in a telephone interview.
Overseas buyers are changing Arcadia, according to Nunez, 55, who has lived in the city since he was 6 years old.
“You drive every street and there are three or four new houses being built,” he said. “It’s just incredible, the demand.”