There’s no doubt about it: Chinese nationals shopping for homes to buy in the United States prefer new construction to resale — and by a wide margin.
In a recent online survey, prospective Chinese homebuyers assigned average scores of 7.3 to a brand-new home for sale by a builder and 5.8 to an existing home for sale by a homeowner.
The survey was conducted by Juwai.com. Headquartered in Shanghai, Juwai is a top Chinese portal for international property listings with 2.5 million homes from 89 countries.
Chinese buyers have “a strong cultural preference for new homes,” says Mathew Moore, Juwai’s head of the Americas, in a company statement.
Builders Digital Experience, the Austin-based company that operates NewHomeSource.com, recently signed an agreement to share its 110,000 new home listings with Juwai. Listings will be professionally translated into Chinese to help Chinese nationals find the newly constructed U.S. homes they want to buy.
At least one of the most expensive homes sold in Los Angeles in the last year was purchased by a Chinese national buyer, according to Santiago Arana, managing partner at The Agency, an exclusive real estate brokerage in Beverly Hills.
Chinese buyers love new construction and “are very keen on finishes, luxury and modern brand-new homes,” Arana says.
Why They Buy
It’s not only coastal cities like Los Angeles, New York and Miami that attract foreign property buyers, including Chinese nationals. Smaller markets like Dallas and Chicago are magnets as well.
Chinese nationals typically buy U.S. homes as investment properties, not personal residences, says Ida Hung, a Realtor at Virginia Cook, Realtors, in Dallas.
Some buy sight-unseen. Others rely on their adult children, who may be studying in the United States, to preview homes and send pictures. The children then occupy the home, renting out spare bedrooms to produce income while they’re in school or after they graduate, Hung explains.
The EB-5 visa program also motivates Chinese buyers to purchase U.S. property, Hung says.
EB-5 allows foreign nationals who invest in a new commercial enterprise that creates or preserves 10 or more jobs in the United States to apply for permanent U.S. residency. The opportunity encompasses not only the investor, but also his or her spouse and unmarried children up to age 21, according to the U.S. Citizenship and Immigration Services’ website.
What They Want
One reason Chinese nationals prefer newer construction is that newer homes typically require less maintenance, explains Brian Glazer, a Realtor at the @properties real estate brokerage in Chicago, who has sold homes to these buyers.
“They’re in another country. They don’t want to have to deal with (repairs),” Glazer says.
Newer construction isn’t Chinese nationals’ only homebuying criteria. The Juwai survey found these buyers also value safe neighborhoods, convenient locations, good schools, established neighborhoods and quality construction.
“When a new home is also located near good schools or other conveniences, it really has an advantage,” Juwai’s Moore said.
Purchase Financing
Chinese nationals usually pay cash when they purchase a home, according to Justin Lopatin, vice president of mortgage lending at PERL Mortgage in Chicago. He says those who are able to obtain financing typically must make a down payment of at least 50 percent to qualify.
A February 2016 survey by John Burns Real Estate Consulting found 60 percent of Asian consumers shopping for a new home planned to use funds from savings or other investments for their down payment. The category included Chinese buyers living in the United States.
Asians as a group comprised 12 percent of the survey’s 21,848 respondents, according to Mollie Carmichael, a principal at the Irvine, Calif.-based firm.
Buyer Preferences
Carmichael also noted Asian consumers’ preference for newly built homes.
“There’s no question,” she says, “that Asians are not only very likely to consider new first, but also tend to pay a premium of anywhere from 5 percent to 10 percent, compared with other buyer profiles.”
Asian consumers were also more likely to prefer a larger home on a smaller lot.
Twenty-three percent, higher than the national average, preferred a home with 3,000 to 4,000 square feet of space and 38 percent, lower than the national average, wanted a backyard with 15 square feet of space or less.
The survey found Asian consumers were the least likely group to spend extra for upgrades. However, they were willing to pay more for certain amenities, such as stone floors, 10-foot ceilings, a wok kitchen, indoor clean air unit and building materials with no harmful chemicals.
Carmichael says these preferences hint at Asian buyers’ intention to purchase the homes for investment purposes, not their own occupancy.
Beyond the home itself, the John Burns survey found Asian consumers most highly valued a community’s location, safety and quality of schools. Investment potential was, not surprisingly, also important.
“Education and location very much drive where they are going to purchase,” Carmichael says.
Marcie Geffner is an award-winning freelance reporter, writer and editor in Ventura, California. In the last decade, she has penned more than 1,000 published stories about residential and commercial real estate, banking, credit cards, computer security, health insurance and small business, among other subjects. Editors describe her as “detail-driven,” “conscientious,” “smart” and “incredibly versatile.” Her award-winning reporting has been lauded as “rock solid,” “spot-on relevant,” “informative,” “engaging,” “interesting” and “nuanced.” Her stories have been cited in seven published nonfiction books and two U.S. Congressional hearings.
Prior to her freelance career, Geffner was senior editor of California Real Estate magazine. Later, she became managing editor of Inman.com, an independent real estate news website. She also has prior employment experience in technical writing, corporate communications and employee communications. She received a bachelor’s degree in English with high honors from UCLA and master’s degree in business administration (MBA) from Pepperdine University in Malibu, California. She enjoys reading, home improvement projects and watching seagulls at the beach.
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