The decline of U.S. real estate market is further deteriorated by the recent financial crisis on Wall Street; at the same time, homebuyers from China gradually become an important force to bolster the U.S. housing market, and they start to gain much more attention from developers and brokers than in the past.
The consumer market for residents in China who are making a good living is no longer defined by the geographic boundaries of the country. According to a report released by National Association of Realtors (NAR) last month, in the period between May 2007 and May 2008, homebuyers from China accounted for 7.5 percent of all transactions in the United States made by foreign buyers. Buyers from China rank number four, trailing behind those from Canada, Britain and Mexico, while beating those from India and Germany.
The NAR report indicates that one-family homes are the bestselling item among Chinese homebuyers, which accounted for 74.4 percent of all transactions by them. Fourteen percent of these buyers purchased luxury townhouses, and 11.6 percent bought condo units during the reporting period.
The report also shows that California and Florida are the most popular states for Chinese buyers. Their median purchasing price of real estate in these two states is $450,000, a $100,000 surge from one year ago and the most expensive among all foreign buyers. The second highest median price is $350,000 made by British buyers. In addition, 14 percent of Chinese buyers spent over $1 million, making them the most affluent among the buyers.
The potential of Chinese buyers has already drawn enormous attention from U.S. realtors. The luxury hotel-and-condo building constructed by Donald Trump in Soho, Manhattan has a listed price of $3,200 per square foot. Seventy percent of buyers under contract are foreign buyers, among them 3 to 5 percent are from China. Prodigy International, the agency in charge of the building’s marketing, sent their representatives to Shanghai to attend a real estate exhibition this month, hoping to attract more clients from mainland China. Rodrigo Nino, the president of the agency, asserted that the economic boom in China has created a new class of customers, who can easily afford a luxury unit in the Trump building; marketing to these customers is one of the major goals of his agency.
Indeed, Chinese homebuyers can be found among some of the super luxury residential units in New York City, such as the Henry T. Sloane Mansion, a five-story luxury residential building with over 30 bedrooms located at 18 East 68th Street near the Central Park. The 19,000-square-foot mansion is listed for $64,000,000 – the second highest-priced real estate currently listed in the market. According to agency sources, when the mansion was put up for sale in February, some potential Chinese buyers immediately made appointments for a walkthrough in the building. At the very least, support from foreign buyers – including the wealthy folks from China – provides a safety net for New York City to survive through the collapse of real estate market.
