Chinese homebuyers are focusing their search in the high tier, according to a report by Zillow.
The average U.S. homebuyer searching on Zillow views homes listed for around $253,000. The average Chinese homebuyer viewing U.S. homes for sale on Zillow views homes listed for a much higher $572,000.
Part of the reason has to do with the markets Chinese homebuyers are focused on. One-third of Chinese buyers using Zillow are viewing homes in:
- San Jose;
- San Francisco;
- Seattle;
- Los Angeles;
- San Diego; and
- Boston.
In contrast, home searches in these metro areas make up just 7.5% of U.S. home search traffic.
These are all cities with higher than average home values. But when looking at what homes Chinese homebuyers are viewing within these metro areas, Zillow finds these homebuyers are still focused on high-tier homes — a good thing for sellers and their agents, given the excess supply of high-tier homes in California during 2017.
International buyers love California
Each year, California receives a net gain of about 200,000 foreign immigrants. On the other hand, the state experiences a net loss of residents to other states.
While most foreign-born California residents are from Mexico, during the past decade most of these recent immigrants have originated from an Asian country, with more hailing from China than any other nation, according to the Public Policy Institute of California.
Chinese homebuyers prefer California due to:
- the many thriving industries here;
- its pleasant climate;
- excellent university systems; and
- the well-established Chinese-American community.
However, there are some headwinds to international immigration in California.
The U.S. dollar is currently trading “strong” against most other currencies. This means the dollar is more valuable.
A strong dollar sounds good, but it can set back international investment considerably. The Chinese Yuan continues to falter against the dollar, meaning Chinese homebuyer purchasing power also continues to decrease. In other words, Chinese and other international homebuyers are able to qualify for less home today than, say, a year ago with the same amount of foreign money.
Therefore, while Chinese homebuyers are looking primarily in the high tier today, watch for their sights to lower in the coming months, as long as the dollar remains stronger than their home currency.
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