Ian Wyatt: Every homeowner in America knows that the housing market is bouncing back. Look no further than the 5.6% increase in home prices in the last year. But it may surprise you to learn that it isn’t the typical American that’s bidding up home prices.
My friend owns a boutique, high-end construction company in the Seattle area. His company buys ramblers that were built in the 1950s and 1960s in the suburbs of Bellevue and Mercer Island. These towns are among the most affluent Seattle suburbs, located in close proximity to downtown and Microsoft’s Redmond headquarters.
His company pays about $600,000 for a teardown. That’s about 35 – 40% more than he paid just three years ago. They then tear down these older homes, and build 4,000 – 6,000 square foot homes that sell for $1.8 – $2.3 million.
The Seattle Times recently featured him in an article about teardowns and new home construction in the wealthy suburbs.
Not surprisingly, many of his buyers are execs from Amazon, Starbucks, or Microsoft. But he also says that 40% of his customers are Chinese nationals.
My friend’s business isn’t unique…it’s a trend that’s happening in cities along the West Coast, from San Diego to Vancouver. The close proximity and large Chinese communities in these cities make them attractive.
Newly wealthy Chinese are seeking ways to take their savings outside of the country. Right now, U.S. real estate seems to be one of their favorite places to invest.
A recent report from the National Association of Realtors looked at U.S. real estate transactions by international clients. Over a 12-month period ending March 2014, international buyers spent $92.2 billion buying homes in the U.S. That was a 35% increase.
Source: National Association of Realtors
Chinese nationals were at the top of the list, accounting for $22 billion of U.S. housing purchases. They’re purchasing homes with a mean purchase price of $590,000. That’s more than double the average price of a home in the U.S.