US home purchases by foreign buyers dropped a staggering 36 percent between April 2018 and March, from $121 billion to $77.9 billion, according to a new report from the National Association of Realtors. The slowdown included home purchases made by both nonresident foreigners and recent immigrants or visa holders, and was evident across the board: US real estate purchases by citizens of Canada, China, Mexico, India, and Britain were all down from a year ago.
But the drop in Chinese buyers was the most dramatic, plunging 56 percent: from $30.4 billion in 2018 (and $31.7 billion the year prior) to $13.4 billion. And while Massachusetts isn’t among the top overall states for international buyers — Florida leads the nation, as a vacation-home haven for Canadians and Britons — it does rank as the fourth most popular state for Chinese buyers, who spend an average of $674,900 on US homes.
“Boston has always been a primary market of interest for Chinese buyers and investors due to its world-class educational and health care institutions and innovative economy,” said Patty Chen, president of PattyC Property Group in Wellesley, a full-service brokerage that helps Asian entrepreneurs invest in US real estate.
But Chen said Boston hasn’t been immune to the striking decline in Chinese investment across the United States over the past two years. “Chinese buyers have dramatically reduced their real estate investments and purchases in Boston,” she said. “While there are many who are still interested in looking at properties, there are fewer people closing deals since 2017.”
Tom Truong, president of the Asian Real Estate Association of America, said local members haven’t seen much of a change this year, noting that a slowdown in Chinese investment was already underway. “The effect started about two to three years ago when the Chinese government really clamped down on money coming out of China to the US,” Truong said.
Chinese citizens are allowed to purchase $50,000 in foreign currency per year, a rule that Beijing began enforcing more strictly at the end of 2016. “We’ve seen an influx of cash buyers, but it takes a lot more than $50,000 to buy cash here in Boston,” Truong said. However, people can still get around the rule, he added, whether by spreading out funds among multiple relatives or using a broker who can first move the money to Hong Kong or Canada before it ultimately reaches the United States. “What has slowed down for us is the timing required to close on a property,” Truong added, as getting money out of China has grown more complex. “It used to be we can close in 60 days and the money is in the bank. Now it could take 120 days to line things up.”
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