Chicago, Ill. (AP) – Shanshan Wu already owns three houses back home in China. But the 36-year-old has spent the last two months in Chicago shopping for a three-bedroom. She’s got cash to spend – up to $400,000.
And she’s not done.
“The real estate market in China is dropping and I’m planning to sell one of them to maybe buy more houses in the U.S.,” said Wu, whose hometown of Yunfu is in the province of Guangdong in southeast China.
Chinese have been snapping up U.S. real estate of all kinds, looking for a safer place to put their money than their own slowing economy. Investors from China are now second only to Canadians in the number of U.S. homes they buy.
Shanshan Wu (right) goes over real estate listings with her broker, Lisa Li, in Naperville, Illinois. (AP Photo/M. Spencer Green)
In the last few months, amid signs that China’s economy is slowing even more than expected, Chinese investors have stepped up their buying even more. The government’s decision to downgrade the country’s currency in September added to their urgency, since a weaker yuan makes buying real estate in dollars more expensive.
“I got a spur of buyers contacting me the past few days,” said Gloria Ma, an agent with Re/Max Action in Lisle, Illinois, who is working with several Chinese homebuyers. “Some of the people are selling part of their holdings over there and coming here to buy.”
While purchases by foreigners represent just a sliver of overall U.S. home sales, they have impacted markets significantly in certain cities such as New York, San Francisco, Seattle and Irvine, California. Buyers are also showing up in more affordable Midwestern areas like Chicago.
In the 12 months ended in March, roughly 209,000 U.S. houses were sold to buyers living outside the U.S. or immigrants in the country for less than two years, according to the National Association of Realtors. That represents about 4 percent of all sales of previously occupied homes in the same period.
Of the $104 billion in total sales, Chinese buyers accounted for the biggest portion, $28.6 billion. Half of those sales involved homes in Florida, California, Texas and Arizona.
Overall, U.S. home sales to foreign buyers have been falling – 10 percent in the 12 months ended in March compared to the same period a year earlier – but the devaluation of the yuan makes a slowdown in Chinese deals unlikely.
That’s one reason it’s likely that Chinese who are interested in buying real estate won’t pull back now, said Lawrence Yun, chief economist for the National Association of Realtors.
So far this year, the yuan has fallen 2.6 percent versus the dollar. It now takes about 6.37 yuan to buy $1. That’s still better than five years ago, when 6.77 yuan bought $1.
For now, the change in the currency is likely not enough to dissuade well-heeled homebuyers from China, said Wei Min Tan, a real estate broker who caters to investors looking to buy condominiums in Manhattan.
“My clients may say, ‘OK, I’ll just negotiate an extra 5 percent off,” said Tan, whose clients tend to buy condos priced between $1 million and $5 million.
That price range is typical of Chinese investors buying homes elsewhere in the U.S. And most of them pay in cash.
“In the last year or two, we’ve seen more sales pushing $5 to $10 million,” said Tere Foster, managing broker for Team Foster at Windemere Real Estate in Seattle.
The segment of homes most in demand by Chinese buyers are those priced around $1.2 million, she said.
“That’s where we’re seeing a lot of the business,” Foster said.
Not all buyers are wealthy investors. Some are middle-income earners with kids bound for university in the U.S. They will typically buy an apartment or small single-family home for their kids to live in while they go to college, said Lisa Li, an agent at Re/Max of Naperville, a suburb of Chicago.
Others will use the home as a vacation property or a rental.
It’s not just the U.S. attracting Chinese real estate investment. Australia, other parts of Asia and Europe have also been popular spots for Chinese homebuyers.
And since 2010, investors from China have bought roughly 100 vineyards in France’s Bordeaux wine-making region, according to a report published earlier this year from Christie’s International Real Estate.
The main reason: To protect their money.
“They want a safe place to park their assets,” Tan said. “A lot of my clients were not expecting the Chinese economy to be strong indefinitely. A lot of them started moving assets to safer countries a few years ago.”
Wu, the CEO of the countertop maker, is looking to make her move now.
She plans to buy a house in cash and live there for at least three years as she works to gain a foothold for her business in the U.S. Wu’s also eyeing the city’s Chinatown neighborhood as a location where she might buy another home as an investment, and to host out-of-town visitors.
Wu says she’s determined to land her first home in the U.S., despite extra costs from the devaluation of the Chinese currency.
“It affects us a little bit,” Wu said. “But not much.”