Asians flock to scoop up U.S. real estate
Million-dollar California homes seen as bargain by Chinese
An influx of well-heeled homebuyers from Asia has San Francisco Bay Area real estate firms competing for a lucrative and growing slice of the region’s residential market.
“It has gotten big enough to where people are starting to pay attention to it,” said James Yang, an agent with the Sereno Group in Palo Alto, Calif. “If you read the Chinese newspapers or listen to Chinese radio, there are ads from Bay Area real estate agents trying to reach out to that demographic.”
One enterprising Palo Alto real estate broker, Ken de Leon, bought a Mercedes-Benz van that seats 14 and is using it for tours with a Mandarinspeaking agent. Passengers one recent Saturday included an older couple from China who have lived in San Jose, Calif., for a year, and a younger man shopping for a brother who works at Apple.
With its good schools and Silicon Valley address, Palo Alto has become a point of interest for many mainland Chinese shopping for a second home or planning to move to the area, de Leon said. Among them are people cashing in on gains from a run-up in real estate values in China in the past decade.
On a recent weekend, the van slowed as it passed the home of late Apple Inc. chief Steve Jobs and, later, the garage where David Packard and William Hewlett founded Hewlett-Packard Co. Each time the van passed a school, a second de Leon agent called out its Academic Performance Index score.
The tour ended at a home in Los Altos Hills, Calif., that was listed at $3.998 million. Less than a week later, it had drawn three offers.
De Leon said he has sold at least 20 homes to buyers from China in the past year, usually in the $1.5 million to $2.5 million range. Roughly half are buying as an investment, a third are buying because of the area’s highly rated schools, and one-fifth are buying second homes, de Leon said.
The Asian interest in Silicon Valley real estate shows no signs of tapering off, de Leon said. “If anything, it’s getting stronger.”
And it was already quite large. A National Association of Realtors study reported that Chinese — including those from Hong Kong and Taiwan — were the secondlargest group of international homebuyers behind Canadians, paying a median price of $425,000 for U.S. residential real estate. The association said 53 percent of Chinese buyers who bought in the U.S. bought in California.
“Compared to Asian prices, Palo Alto is considered pretty dirt cheap,” said Kenny Weng Kong Lo, general manager of Intero Real Estate Services’ Hong Kong office. Intero also has an office in Shanghai.
Lo’s team recently helped the head of a Chinese company expanding in the United States buy a second home in Los Altos Hills for more than $6 million. Another client, a professional relocating from China to the valley, just purchased a home in Palo Alto for $2 million, he said.
Mark Wong, an agent with Alain Pinel, said he’s taking a team of agents to China in December. “We’ll connect with people who want to come to the U.S. and people who want to diversify their portfolio,” Wong said.
“Chinese buyers are everywhere nowadays,” said Ellen Osmundson, managing partner of MJ Real Estate International in Walnut Creek, Calif., and president-elect of the East Bay chapter of the Asian Real Estate Association of America. “It’s not just the Bay Area; it’s the entire country.”
Minhua Jin, an agent with Intero’s Silicon Valley office, said she recently handled the sale of three houses in Saratoga, Calif., to buyers from China based on their floor plans alone — the houses haven’t been built yet.
“On every listing from Palo Alto to Saratoga, we have a good portion of buyers whose money is coming from China,” she said. “I hear from buyers that in China, the real estate market has gone up so much in the past 10 to 15 years that everyone who purchased property a long time ago has made a good fortune. In cities like Beijing they’ve seen up to 10 times in appreciation.”
When they come to the U.S., she said, “they are comparing square footage cost here to Chinese living space and it’s still quite low. They feel like for the money they are spending, they get much more here,” Jin said.
The Chinese government may have motivated some of these buyers when it announced this year that it was going to enforce a 20 percent tax on real estate transactions. That set off a flurry of selling by people who had held real estate for a long time and had large gains.
“That’s a reason they started moving money heavily,” said Intero agent Jinny Ahn. “People are cashing out their property and moving money to the United States. Three [million] to $4 million is considered not that expensive.”