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Thursday, Apr 18, 2024

Chinese Buyers Spur Luxury Home Sales

Driven by lower home prices, buyers from China are snapping up luxury homes in Orange County.

Wealthy Chinese are saying “California is on sale right now,” said Lili Kung Peters, president of Newport Beach-based McMonigle Group Inc.’s international division.

Waterfront sections of Newport Beach and newer neighborhoods, such as Shady Canyon in Irvine and Newport Coast, appear to be favorites for Chinese buyers.

While specific data is hard to come by, many local agents said they’ve seen an increase in sales to overseas Chinese.

Jacqueline Thompson, an agent for Newport Beach-based Surterre Properties Inc., said she’s seen a 25% to 30% increase in such sales.

Thompson recently sold a $6.2 million home on Linda Isle in Newport Beach to a Chinese businessman.

Renee West represented the buyer, who came as a referral from a Hong Kong couple who bought a Bayside Drive home in Newport Beach.

Chinese buyers usually have a good idea of what they’re looking for, according to West, an agent for Prudential California Realty in Corona del Mar.

“They know what they want—they know where they want to be,” she said.

Prefer Newer

In general, they prefer waterfront homes and newer, upscale neighborhoods.

“They’re really particular about the home being fairly new and in fairly good condition, almost move-in ready, with the exception of changing carpet and painting,” West said.

Chinese buyers typically shop for second or third homes here.

Nationally, home sales to international buyers were up 19% to $82 billion for the 12 months through March, according to the Chicago-based National Association of Realtors.

That figure includes sales to nonresidents and recent immigrants, and compares to $1 trillion for the overall market for the same period.

After Canadians, the largest international buyers in the U.S. are from China.

Many newly wealthy Chinese are looking to invest some of their fortunes outside China.

Some buy a home as a place to park their money. Others use them as a base for business travel. A number of Chinese buyers here have a dual purpose—an investment as well as housing for their college-aged children who might be attending the University of California, Irvine, or other schools here.

Four states—California, Florida, Texas and Arizona—have the most international buyers, according to the National Association of Realtors.

Florida sees as many sales as the other three states put together, with Europeans and South Americans doing most of the buying there.

California attracts Asians.

The rise in luxury home sales to Chinese here hasn’t been enough to hike the market—a trend that’s been seen in places such as Vancouver, British Columbia.

Swift price increases helped along by Chinese buyers in Vancouver have prompted calls by some Canadians to limit foreign investments over fears that locals will be priced out of the market.

In OC, luxury home prices still are falling a bit.

Chinese buyers almost always strike cash deals.

A lack of credit history in the U.S. limits financing for some.

And, like most homebuyers, Chinese buyers want a deal, according McMonigle’s Peters, a native of Taiwan.

“They’re not going to just pay the asking price,” he said. “They’re going to want to negotiate to get the best deal out of any sale.”

Depending on the buyer, feng shui can be a big factor. It’s a design technique rooted in Chinese culture and now used by many designers worldwide.

Some Chinese buyers will have a feng shui expert screen a home first. Others do it themselves.

Feng Shui Hurdles

Feng shui hurdles can be overcome, West said.

She once had a young buyer give her a list of changes to a home that were made to satisfy feng shui sensibilities.

Another consideration is something called guanxi (gwan-shee), which roughly translates to mean relationship, Peters said.

In Asian cultures, the term has a much deeper meaning that can differ from local perceptions, she said.

“A lot of times in the Asian culture what’s unsaid is more important than what’s said,” Peters said.

Chinese Agents

Many buyers want to work with a fellow Chinese. Agents representing Chinese buyers often come from areas outside OC with big Asian populations, including various cities in the San Gabriel Valley.

Most of the Chinese buyers speak English, Peters said.

They still “feel more comfortable telling an agent in their native tongue their true feelings about a property and what they are really looking for,” she said.

Marketing to Chinese buyers can be a hurdle for listing agents.

Agents representing buyers generally aren’t as familiar with OC properties, said Steve High, an agent for Coldwell Banker Previews International’s office in Newport Beach.

“It’s very challenging for brokers like myself to engage these buyers,” he said.

High counts his website—which offers information on homes translated into Chinese—as one of the best marketing tools to lure buyers and their agents.

In any case, selling to a Chinese buyer means being aware of cultural nuances, Peters said.

“We need to be more worldly, more culture-sensitive,” she said.

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