I heard an interesting story yesterday about Chinese real estate purchases in the USA. Sure, I had talked about it recently at a friend's house over dinner with a business partner who mentioned his Chinese clients were dropping a million on a house every time they came to the US. But I hadn't really focused on the extent of this movement until I heard an article on NPR yesterday.
The news? Zillow has begun publishing its entire U.S. real estate property database in Mandarin on the biggest real estate Web site in China. This means Chinese buyers can use Zillow to find properties near family and friends in their price range. “The fact that Zillow is going there is huge,” says Hall Willkie, president of New York real estate firm Brown Harris Stevens Residential Sales. “The Chinese may just overwhelm the United States with purchases.”
The Chinese are on the move. In 2014, a record number of Chinese, 100 million, are expected to travel abroad, an army roughly as big as Mexico’s population. They have money in their wallets, an appetite for the good life and ants in their pants.
You can’t blame them for feeling unsettled at home. Beijing’s aggressive anti-corruption sweep has netted thousands of big fish, and more confiscations are on the way. Pollution has created an asthma epidemic, food safety scares are commonplace, and China’s economic pace ebbs. There is still no true dissent or freedom of expression allowed. So the country’s wealthiest are on the move and want a better life for themselves or their children.
Some 9.3 million Chinese have immigrated in recent years, and 64 percent of the country’s remaining rich households — a category that includes a few million people — want to leave or are in the process of doing so.
The United States is their preferred destination, and American real estate is becoming their new T-bills, a safe-haven asset. Like bullion, it’s an asset class denominated in U.S. dollars, safe from confiscation and, when necessary, bought anonymously to hide wealth from governments or creditors or ex-partners. But unlike bullion, U.S. real estate can earn income, provide a roof and help obtain a visa.
This month, U.S. real estate Web site Zillow begins publishing its entire U.S. real estate property database in Mandarin on the biggest real estate Web site in China. This means Chinese buyers can surf the Net to find properties near family and friends in their price range. “The fact that Zillow is going there is huge,” says Hall Willkie, president of New York real estate firm Brown Harris Stevens Residential Sales. “The Chinese may just overwhelm the United States with purchases.”
A buyout is already underway. In 2013, Chinese buyers snapped up $11 billion worth of properties in the United States, capturing second place (at 12 percent of all foreign buying) behind Canadians for the first time, according to the National Association of Realtors’ Profile of International Home Buying Activity.
Willkie notes a spike in terms of interest in the past 18 months: “In New York, we’ve noticed Chinese buying very large, very expensive apartments, homes. But there are also many buying smaller apartments, $1.5 to $3 million, for their children going to school here. The parents are buying them.”
In 2013, for instance, a Hong Kong woman paid $6.5 million for a two-bedroom in the tallest residence in New York, One57, for her daughter so she’ll have somewhere to live when she gets into Columbia, Harvard or NYU, she told her agent. The daughter, currently, is 2 years old. Another Chinese woman bought four $20 million units there for family members.
The desire to get money out of China for whatever reason, added to Zillow’s foray into China’s living rooms, will only enhance enthusiasm. China’s biggest exports to the United States may end up being capital and people. Look out for its biggest winners in a neighborhood near you.
Of course, your property listings with me are already advertised on Zillow, so no worries about having Portland representation on China's computer screens. When talking with a client, Brian, last night, we decided it's the new GODZILLOW!
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While not for the faint of heart, some out-of-town home buyers just can't be there to see every new listing, and have to make the offer without having seen the house. This requires a high level of trust, and the Realtor must be very careful to guide, but not sell. (Though it helps to have spent considerable time with the buyers on at least one previous visit.) Obviously, there is a distinct possibility that once the buyer sees the home, it may not be exactly what they had envisioned.
This is why mobile devices are so useful in the home buying process. With a portable hot spot, a realtor can use Facetime to walk through the home with a live feed to the buyer. Questions can be asked real time, and Realtors can show nooks and crannies that aren't normally photographed. Panoramic photos can show the entire yard and its surrounds, so buyers can see whether there are homes peering into their private spaces. Videos of the street, and all the neighboring houses can help the far away buyer to get a good feel for the neighborhood. Texting, phone calls and email from the home make for instant answers to any questions the buyer may have. Once they've "seen" the home in this way, they can feel a level of comfort in buying a home sight-unseen because they've actually "seen it."
The home above looked like a nice, private new construction option for my buyers. When I previewed the home, it was sandwiched between one large home that overlooked the entire site, and another too close for comfort. One panoramic photo told the tale better than any telephone conversation.
The Wall Street Journal has just published an interesting article on the use of mobile phones and buying homes.
I'm in the middle of one such transaction at the moment, and I'll have to share the details once it's concluded!