This week, a report by The National Association of Realtors (NAR) revealed that activity from foreign real estate buyers increased substantially for the first time in three years.
All in all, foreign citizens bought $59 billion dollars in US property in the past year; however, none were as aggressive with their funds as the Chinese, who spent a staggering $6.1 billion across fifteen different states in the US between April 2021 to April 2022 – which amounts to an increase of nearly 30% over the year prior.
With Biden in office, Chinese investors are gobbling up US houses at an alarming rate.
From the Washington Examiner:
“Foreign purchasers from China bought $6.1 billion in U.S. homes from April 2021 to March 2022, which the trade association’s report said was up 30% from the prior year. Canadians bought $5.5 billion in U.S. housing properties, Indians bought $3.6 billion, Mexicans $2.9 billion, and Brazilians $1.6 billion, according to a new report by the National Association of Realtors.”
According to NAR, the increase in Chinese buyers comes as other countries begin banning Chinese investments because they contributed to skyrocketing housing prices in other markets. Nevertheless, the US allows their dollars to keep pouring in. California, with 31% of all Chinese purchases, is by far the hottest spot for Chinese investors in the US over the past year. Followed by New York in second place. Flordia and Indiana are tied for third.
Not only are Chinese investors leading the pack in total dollars, but they are also spending the most per property. With the average home price in the US approaching $400,000 for the first time in history, foreign investors have been paying an average of 600,000 per home. However, this number jumps up to a staggering $1,000,000 average purchase price for Chinese buyers.
In other words, as Americans are rapidly priced out of owning their own home, wealthy foreigners are being allowed to gobble up the dwindling housing supply.
The effects of this are already being felt stateside, as housing prices in the areas where the most foreign buyers have invested are nearly 10% higher than in other areas, according to the Daily Mail.
From the Daily Mail:
“US zip codes that hold the highest number of foreign buyers have increased housing prices by eight percent, according to the journal. Keys says the number of new jobs has increased far more than the number of available housing, causing property values to skyrocket.
The San Francisco Bay Area – located in the number one state for Chinese buyers – has seen a 30 percent increase in employment, but not even a 10 percent increase in housing units, Keys revealed.
‘The big picture is we have an affordability crisis for housing in the cities where the jobs are,’ he said. ‘There are a lot of hoops to jump through to get anything built in these places, especially to build in a way that is dense.’”
Following the release of NAR’s report, Florida Governor Ron DeSantis addressed his state being so high on the list and called the situation a “huge problem” during an appearance with Laura Inghram on Fox News.
“I don’t think they should be able to do it. I think the problem is these companies have ties to the CCP, and it’s not always apparent on the face of whatever a company is doing.”
Chinese purchases of US properties have been garnering intense scrutiny as of late, as several lawmakers have begun to sound the alarm over several large recent farmland purchases. Earlier this month, it was revealed that a Chinese-Communist Party-backed firm had purchased a parcel of land just 12 miles from a US military base in South Dakota. Coincidentally, the farmland is also just miles away from the agricultural area that was just purchased by Bill Gates.
Following the discovery of the CCP-linked purchase, a group of Republican Senators led by Florida’s Marco Rubio sent a letter to Defense Secretary Lloyd Austin and the Committee on Foreign Investment in the United States, asking them to “conduct a review of Chinese food manufacturer Fufeng Group’s recent purchase of roughly 370 acres of land near Grand Forks, North Dakota.”
The land in question “is approximately 12 miles from Grand Forks Air Force Base, which has led to concern that Fufeng operations could provide cover for PRC surveillance or interference with the missions located at that installation,” Rubio’s letter explained.
Now, it has been revealed that Chinese investors have spent billions more on residential properties across the US. Even though it is unknown at this point what, if any, involvement the CCP has in these purchases, the Chinese investors have routinely proven to be a burden everywhere they begin snapping up properties. In the worst cases of this, large cities in Canada have experienced severe housing crises due to Chinese investors accumulating so many homes and leaving them completely empty. These practices have led several countries to place restrictions on Chinese real estate buyers.
From The Daily Mail:
“DeSantis shares similar views to countries, such as New Zealand, Australia, and Canada, which have imposed taxes on foreigner buyers purchasing property.
New Zealand, where Chinese investment has been blamed for a huge spike in home property prices, now charges a 15 percent tax to non-resident buyers. Australia imposes a 12.6 percent tax on any foreign buyer purchasing a home valued higher than $750,000 and have been since 2017. And in Canada, the government takes 50 percent of any sale as a withholding tax.”
Or, in some cases, flat-out ban them from buying homes for a period of time, as Canada is planning to do this year.
As of right now, America places absolutely no restrictions on foreign real estate purchases. We need to follow in Canada’s – and others’ – footsteps and ban Chinese investors from hoarding homes to artificially inflate the market until we can get this thing back under control.
It should go without saying – in America, Americans should come first. Especially when it comes to housing. Wealthy foreigners can look for a tax break somewhere else.