Foreigners, primarily Chinese house hunters, continue to find California housing an attractive purchase as house hunting by non-citizens fell nationwide.
Unlike other housing metrics, theres no simple way to follow foreign buyers as citizenship is not recorded on real estate sales documents. So, my conclusions come from a recent study by the National Association of Realtors.
The associations data is based on a poll of its real-estate agent members who do international business. The survey tracks housing purchases ranging from foreign nationals seeking investment assets or second homes to newer non-citizens working in the U.S. acquiring a residence.
The key trends the survey discovered for the 12-month period ended in March …
1. Foreign buying of existing residences nationwide fell by 6 percent to 266,800.
2. Californias share of foreign purchases of all U.S. residences, existing and new, rose to 14 percent from 12 percent. That share growth could be seen as foreigners vote of confidence in California real estate. Only Florida had more non-citizen buyers, with 19 percent of the national total this year vs. 22 percent a year ago.
3. Folks from the Peoples Republic of China, Hong Kong, and Taiwan were the top buyers, making up 15 percent of U.S. foreign purchases of all types of homes in the past year vs. 14 percent the year before. Chinese buyers chose California 38 percent of the time vs. 37 percent a year ago.
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To see how California stacks up among non-citizen house hunters, I tossed the studys results into my trusty spreadsheet. My best estimation is that roughly 41,500 homes in California were bought by foreigners in the 12 months ended in March. That was up 9 percent in a year.
Buyers from China accounted for about 17,000 of those deals, up 3 percent in a year. Buyers from Canada, Mexico, India and the United Kingdom got a combined 9,000 California homes, off 6 percent. The states biggest growth came from the rest of the world: 15,500 foreign purchases, up 20 percent.
Im well aware that foreign buying of California homes — or any U.S. residence — irks some folks who think these purchases deny Americans a shot at homeownership. Note that Californias total homebuying has averaged roughly 500,000 annually in recent years, so foreign purchases are equal to 1-in-13 of all statewide purchases of existing homes.
Just remember, a foreigners real estate spending doesnt stop at closing. Foreign homeowners cash goes to other slices of the California real estate economy, too. Like paying property taxes. And to housings various renovation and maintenance businesses.
Still, in an era where relatively affordable housing is in short supply, the growth in foreign buying of homes may prompt some Californians to suggest perhaps only citizens be able to own housing. But that may be a be-careful-what-you-wish-for idea.
Most California property owners in a selling mood dont mind the foreign demand. And thats especially true at times when next to nobody wants to buy, like during and after last decades housing meltdown.
Have you checked out Bubble Watch …
Bubble Watch: Are house hunters shying from newly built homes?
Bubble Watch: Is Californias anti-business vibe killing the states economy?
Bubble Watch: Home-equity loans back at pre-recession levels
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