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HousingWire: Chinese Investors Remain an X Factor for the US Housing Market

October 1, 2014

This year, for the first time, the Chinese surpassed Canadians as the top investors in American residential real estate. According to the National Association of Realtors, during the 12-month period that ended in March, investors from China (Mainland China, Taiwan and Hong Kong combined) invested $22 billion into the U.S. housing market. Canadians, the perennial leader in foreign investment, spent about $13.8 billion.

While this upsurge was difficult to predict, the Chinese have good reason to invest in U.S. real estate, and the impact is being felt in the California, Washington and New York markets, where more than half of China’s investment dollars have gone.

Most Chinese buyers are shopping with cash and doing so almost exclusively in California, New York and Washington, while Brazilians and other wealthy South Americans tend to buy in Florida. In those states, they are having an impact.

Cash buyers from other countries might be seen as a threat to domestic homebuyers in these states. These buyers must apply for a mortgage at a time when lending standards are tightened and approvals are slow.

What remains unclear is how much more capacity Chinese investors have to influence housing in the U.S. There is no Chinese version of IRS data that tell us how deep this well of investors might be. If it turns out there are only 100,000 Chinese able to invest in American real estate, then the end of this cash influx will come to an end soon. If there are 15 million, then this could go on for a long time.