The Chinese are coming!…Or should I say a lot more are coming, and contrary to those who came over to the US in the 19th century, the new wave of Chinese immigrants are coming with lots of money and are eager to spend it. They are changing the real estate landscape and setting new real estate values in many states and regions.
The first Chinese immigrants, laborers for the most part, arrived in the mid 1800’s, “escaping” from the poor Southern provinces of the old country to look for job opportunities on our West Coast. Life, for a while, was hardly better than the one they left behind. The attractive mirage that the Gold Rush represented absorbed most of them. From mining for gold, they eventually gravitated to railroad labor. They became low wage workers for a booming industry busy with the construction of the Transcontinental Railroad.
According to Wikipedia, the Chinese accounted for over a tenth of the population of California in 1880. Today, the percentage is down to roughly 3.5% (about 1,300,000), but we are not talking about the same curriculum. Today’s Chinese Americans represent a huge economic power and their appetite for real estate will not be satisfied anytime soon. They want a lot and can afford the best.
This is especially true in California’s Silicon Valley, home of the brightest and most ambitious new Chinese Americans. Many of them, young top guns in the fields of engineering & sciences, came in the mid 1980’s, screened with a fine comb by their government which paid dearly for their scholarships in leading universities. One of them was Minhua Jin, now a star real estate agent for Intero Real Estate in Cupertino. She routinely works with Chinese American clients.
Minhua explained to me that unlike most of the “typical” buyers and sellers, the Chinese buy but they very rarely sell, if ever. They keep what they buy and, as long as they can, they buy more of the same. There are plenty of reasons for that:
- New laws were enacted in Mainland China a few years ago limiting to 4 the number of residential units any person could buy. Now that money is flowing over there, there is only so much art or items of value people can put their hands on to protect their wealth and build equity.
- In the main country, they cannot buy the land on which the real estate is built. It belongs to the government, which is leasing the pad for 70 years. Considering that there is no clue as to what may happen when that lease expires, a lot of homeowners and investors are obviously unsecured about their investment in China.
- Government policies are changing often, further complicating the process, the pertinence of the investment and therefore reducing the appetite for local real estate.
- Education is a very big deal in China these days, especially business & technology rather than just academics that they do well at home. Whenever possible, well to do families send their kids to the best schools in the US or Europe. Some go back; some stay.
- Overall, the Chinese are not rich people. Perhaps only 1% of the population can dream of ever buying a home (or many) in the US…But you know what? 1% of 1.4Billion people is a lot of people, a lot of qualified and determined buyers!
- Chinese real estate in key cities multiplied about twenty times in value over the last 15 years or so; those who bought made enough money to buy anything, anywhere, whether in San Francisco, or New York, or Paris, or London.
- The Chinese currency is going up while the dollar is going the other way. Buying a multi-million dollar home here is getting to be very affordable.
- The Chinese, as an old & dear tradition, believe in real estate. They aspire to own their home. You might call it the “Chinese Dream”.
It is clear that the impact of Chinese Americans and Mainland Chinese on US real estate is rapidly changing the rules of the game. It can only accelerate with a growing number of buyers and their growing purchase power. Chinese Americans are part of the new technologies, part of the new wealth. In the Silicon Valley, for example, 1 out of 5 high tech start ups are led by people from Chinese descent, according to a study done by Annalee Saxenian, a UC Berkeley professor.
Knowing how to work with the Chinese is no longer an interesting option for real estate agents, from one coast to the next. It is simply a mathematical necessity.