Chinese buyers, who have made a strong comeback in the U.S. real estate industry in previous years, are likely to reduce their investment in the U.S. by up to 60 percent this year, according to information provided by a U.S. real estate industry organization.
For the third year in a row, investment in U.S. real estate by Chinese, including mainland Chinese, Taiwanese and Hong Kongers, has weakened, according to MANSION Global, a global real estate market information website. As of March of this year, the total Chinese investment in U.S. secondary housing was about $11.5 billion, nearly two-thirds less than the $30 billion spent in the previous two years.
The National Association of Realtors estimates that Chinese spending will fall sharply in the current year to between $5 billion and $7 billion. Gay Cororaton, director of the association’s housing and business research division, was quoted by Reuters as saying, “Chinese investment in the U.S. real estate market is likely to continue to decline.”
According to Cororaton, the main reason for the decline in Chinese investment is the travel ban adopted by the U.S. during the neo-coronavirus pandemic, which limited the number of Chinese entering the country. The epidemic is still developing in the United States, and there is no hope that the travel restrictions will be lifted in the near future. In contrast, Chinese who have the epidemic largely under control may also be hesitant to travel to the United States.
However, during the pandemic, the U.S.’s extremely accommodative monetary policy and massive bailout to mitigate the impact of the epidemic on the economy drove mortgage interest rates down to historic lows. This has not only improved lending conditions but also stimulated increased demand in the real estate market.
The National Association of Realtors reported on Thursday (Oct. 22) that sales in the U.S. secondary market increased more than expected in September, reaching 9.4 percent. The seasonally adjusted annualized number of homes sold was 6.54 million.
The report said the market would have been stronger if there had been more homes on the market. Housing inventory is currently at its lowest level since 1982.
Despite many uncertainties, especially the overall deterioration in U.S.-China relations, Chinese interest in the U.S. market does not seem to be diminishing. Many of them are anxious to find a safe place to invest their large foreign currency holdings.
Juwai IQI, an international real estate website in China, reportedly saw a 12 percent increase in the number of inquiries for U.S. real estate information this year.
Georg Chmiel, executive chairman of Juwai IQI, is quoted by Reuters as saying, “There’s still a lot of pent-up demand,” and “Chinese buyers have money, and they still value the U.S. real estate market and the U.S. lifestyle. ”
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