The American Dream of home ownership isn't just for natural born citizens.
The American real estate market is on a new upswing, and it's attracting a surge of buyers from China. But this isn't the typical investor story. While a significant amount of Chinese money is flowing toward ultra luxury residential and commercial properties on the east and west coasts, something a lot more interesting is happening in smaller, midwest communities.
Moms and dads are looking West for a new home with security and education opportunities that can't be had in the East. And that means more buyers in areas with great schools from elementary grades on up through college.
Chinese Wealth is at Risk
China's stock market is unstable to say the least, although Economist says that's all part of a growing economy. But that doesn't mean Black Monday was easy to bear or witness. With a drop in equities of 8.5 percent, hundreds of billions were lost and wealthy investors looked outside of their home country to spend.
The Chinese government has made it easier, although that might not last long. The New York Times explains that stimulus cash intended to boost the economy at home has also flowed out, due to a 'broader liberalization' of their usual financial policies. Stephen A. Schwarzman, CEO of Blackstone Group, tells the Times that the capital flows will continue to the west until the Chinese government decides to slow it down again.
There's also the risk of loss outside the stock market. The Times says that billions have been confiscated from Chinese citizens under false accusations of crimes. And while the most corrupt are losing power, many people are looking for greener pastures and U.S. green cards.
It's easy to understand why anyone wants a stable home to raise a family.
Luxury is Appealing, but So is Suburbia
The classic idea of the wealthy Chinese investor is luxury properties in California and New York City. Sprawling mansions and high-end condominiums are the standard residential investment, and exclusive luxury communities designed by and for Chinese investors are popping up in areas such as Corinth, Texas. But many wealthy Chinese are just as interested in a stable, rather ordinary life in a slower-paced community and they have the means to get it.
Good education opportunities for children seem to be one of the biggest reasons for investing in comfortable residential communities across the midwest. The Times also explains that ownership itself means something different here than it does in the East. Where property rights can terminate at 70 years in China, buyers are certainly attracted to the fact that when you own property in the United States, it belongs to you unless you decide to sell it.
Many, if not most buyers from China pay cash. That's a major boon to local economies. Cash buyers have the advantage, which can drive bidding wars with people who need traditional financing as well as among other cash buyers. This doesn't happen everywhere, but in areas with good homes and great schools, low real estate inventory can make it difficult for American buyers to find a home.
In many ways, investors from China are a shot in the arm for American real estate. In the right areas, selling might be easier than ever.
One major concern is that previously affordable areas in the midwest and the mid-Atlantic will face much higher demand, inventory will dwindle, and prices will soar. That's not so great for the traditional American buyer. Cash is king, especially when it comes to real estate.
If you're expecting to list your home in the near future, eppraisal can help. We'll connect you with professionals to help sell your home, whether it's in a booming cash market or not.
