Chinese real estate investors have been the top foreign buyers of U.S. residential real estate for the past three years, and although the Chinese government is tightening its hold on its citizens’ investment capital the U.S. housing market is set to attract those investors’ capital for another year at least. National Association of Realtors (NAR) economist Lawrence Yun recently described Chinese investors as “gobbling up inventory” around the country and noted how these individuals often pay for their properties in cash, making them extremely attractive buyers. Yun added he does not believe the U.S. housing market will see a huge slump in Chinese investments as long as China’s economy continues to grow despite the Chinese government’s recent instructions to banks to deny transactions for overseas property purchases in a wide variety of cases. According to Juwai.com, one of the largest online venues for Chinese investors looking for international real estate, search traffic for homes costing less than $500,000 has increased on the site, possibly in response to capital restrictions at home.
This shift toward more affordable housing could be bad news for developers making money building ostentatious “spec houses” to attract multimillion-dollar investments from Chinese buyers looking to park their money abroad, but it is likely good news for a number of U.S. housing markets that have not traditionally benefitted on a large scale from international investments. According to Schroders Global Cities 30 Index, these three U.S. cities are on the rise as global hot spots for international investors in 2017:
1 | Boston
Boston rose from 24th on the list to third place in 2017 thanks to a large number of colleges and career opportunities in the area. The city’s growing population of renters and strong employment numbers make it a good market for investors in cash-flowing rental properties as well as those who wish to simply buy-and-hold or fix and flip.
2 | Chicago
Despite concerns about violent crime, Chicago rose six spots on the Forbes list to fourth place as one of the best places in the United States for long-term value. Home values in the metro area rose more than eight percent over the past 12 months, well ahead of the national average, and are predicted to rise at least three percent in 2018.
3 | Houston
Houston’s seventh-place position on the list likely surprises no one familiar with the Texas real estate market. Houston, while often the topic of speculation about overvaluation, benefits from strong, statewide, pro-business legislation, relatively affordable housing, and a steady influx of West Coast companies and their employees fleeing California’s astronomical housing prices and cost of living. Although appreciation in the area has leveled off in recent months, rental rates have been climbing steadily since 2013 and the market, while cooler than some others, is generally considered to be inherently stable.
Los Angeles and New York City also made the list, but have been staples in the top 10 for quite some time unlike these three relatively new arrivals on the scene. Seattle placed 13th of 30 and Washington D.C. placed 19th.
Carole Ellis is the editor-in-chief of Think Realty Magazine. You can reach her at firstname.lastname@example.org.