Thanks to an influx of foreign buyers, investors, and young professionals with large sums of cash, real estate in the U.S. is selling fast. In the past, paying for a home in this fashion was less common, but the tides have shifted from New York to Los Angeles, and more international buyers are snatching homes at a frenzied pace. Of the $68.2 billion spent by non-U.S. buyers from March 2012 to March 2013, Chinese buyers represented 18 percent of that, according to real estate records from the National Association of Realtors.
More are settling in California than anywhere else, and Chinese nationals made up more than half of the homes there sold to foreign buyers, according to CNN Money. Not only are the average homes selling, but the mega-mansions are as well. Sally Forster Jones, Los Angeles area Realtor, estimated that around 10 multi-million dollar homes were purchased by Chinese homebuyers in the past 12 months, she told them.
"The uptick in sales to Chinese buyers started several years ago but it has increased dramatically lately," Jones told the news source. "Some have children going to school in Los Angeles and use the homes as residences for them and [as a place] to stay at when they visit their kids."
A possible reason for the increase in foreign buyers might have to do with the U.S. government's EB-5 Immigrant Investor program, in which investors must put at least $500,000 into a business that employs at least 10 different jobs. Out of all of the diverse nationalities using this method to buy in the U.S., China accounted for 80 percent.
Cash fuels bidding wars
Thanks to more buyers with large amounts of cash, it is becoming more competitive to purchase a home. In some markets, the only way to close is to place an offer with all cash within several hours of seeing a home, according to The New York Times. Waiting any longer might mean losing out on a dream home.
"It's everyone from a kid out of law school to an investor from China, walking around with thousands to spend," Kameron Eliassian, a Los Angeles real estate agent, told the news source. "I don't know where it's coming from, and I don't care. Just show me proof that it's there, and we're good."
This mentality has fueled the housing market, and homes are selling fast. However, buyers might not include any first-timers, since many don't have the financial safety and soundness achieved by wealthier parties. The New York Times stated that buyers in multiple markets are offering thousands of dollars over the asking price just to be competitive.