Market Update – Home sales are down significantly so far this year compared with 2018, even with lower mortgage rates. #chinese #realestate #dtla
Metropolis Los Angeles condominium complex and money from China
REAL ESTATE NEWS
USA Today reported this week that Chinese home buyers and investors have pulled back sharply from the U.S. real estate market. Foreign investors purchased $77.9 billion in residential property in the 12 months ending in March, down 36% from the previous 12-month period, the National Association of Realtors said in a recent report.
All told, existing U.S. home sales are down about 3% so far this year from the same period in 2018, NAR figures show.
Even before the start of the Trump Trade War, Beijing had already placed tight limits on how much capital can leave the country after its devaluation of the yuan a few years ago. The government toughened capital controls more last year as the Chinese economy weakened. Trump’s tariff war is expected to exacerbate this trend.
California is the epicenter of Chinese residential investment in the U.S., with 34% of purchases in the state.
The largest super luxury condo buildings Metropolis and OceanWide Plaza are developed by Chinese-owned companies. OceanWide construction has been stalled due to a pause in construction capital. A number of units hav been purchased at Metropolis, predominantly by a large percentage of buyers from China, many of them were cash buyers. The China source of buyers has partially dried up. This can be good news for local Californians who are looking to buy a home –- a larger supply of condos, fewer competitors and a lower price than a year ago.
With China’s limits on cash that can leave the country, Chinese buyers are now searching for lower-priced homes and relying on mortgages more often. The share of their home purchases with mortgages has risen to 46% in the 12 months ending in March, from 37% the prior year, according to NAR. And more of the buyers are middle-class.
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