Real Estate by Nick Abbadessa
Nick Abbadessa
909-292-7888909-292-7888

Foreign investors driving up Southern California real estate

foreign investors
As a buyer, imagine scrimping and saving a down payment, making an offer above asking price on a home you have your heart set for, including a personal letter regarding why you love the property, and then losing out to someone who doesn’t outbid you, but instead offers cash. Who is this someone? It’s one of the increasing foreign investors grabbing up our Southern California inventory to rent out to folks wishing to one day become homeowners as well. Although frustrating to buyers, now imagine it from a seller’s perspective. What an opportunity to not only receive offers above asking price, but to also receive offers from cash buyers.

Experts are indicating that foreign buyers are playing an increasing force in the real estate market and subsequently contributing to the rise of single family rentals.

Where do these foreign investors come from? According to the National Association of Realtors, Canadians purchase more US homes compared to other foreign buyers and subsequently are more likely to make all cash offers. In southern California, however, Asian buyers dominate. In fact, a 2017 survey by the National Association of Realtors indicates that 71% of foreign buyers in California come from Asia/Oceania, followed by 14% from Latin America, 6% from Europe, and 5% from North America.

No US state has attracted as much attention from Chinese buyers, as California. To place it in perspective, nearly 40% of the US homes purchased by Chinese buyers are located in our state. Furthermore, it is presented that 40% of Chinese foreign buyers intent to use their US home as primary residence, with the other 60% using it as an investment property, second home, or for use by a student.

So why is there such an interest in California? Well, first we have the EB-5 Visa program. This US program grants green cards to foreigners who invest $500,000 in US business. Therefore, entering the world of real estate investment is fitting for such individuals and families. Moreover, Orange County and the San Gabriel Valley, in particular, attract a great deal of foreign investment due to cultural and language similarities.

Interviewing Chinese investors has also revealed that US homes are considered much more affordable compared to their foreign counterparts. Nonetheless, foreign governments (i.e. the Chinese government) isn’t too fond of allowing its citizens to invest their wealth outside of their home country. Consequently, foreign governments are attempting to tighten the ropes on outside investments. But, as described by Chinese homebuyers, the interest to purchase southern California real estate is there and therefore they will figure out a strategy to get their money out, one way or another.

Economists are also stating that locales (i.e. southern California) are experiencing price increases due to the flow of foreign capital. Furthermore, although competition with the abroad is most seen on more expensive homes, the effect is also present on starter homes.

Another factor to consider, is that with foreign buyers winning a great sum of our real estate inventory, it may be suggested that there are fewer homes available to buyers and less competition for sellers (a win for sellers). Additionally, since a great portion of foreign buyers are using these properties as rental investments, there is an increasing number of rental properties available.

If you are looking to buy or sell real estate, may I suggest working with a Realtor, as myself, experienced with this phenomenon. As a buyer, what’s the best way to compete with all-cash buyers? As a seller, what’s the best way to leverage and attract both domestic and foreign buyers? An experienced Realtor, as myself, can help answer these questions and more.

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About Nick Abbadessa

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Nick Abbadessa

Realtor, BA, Cert. Luxury Home Specialist

nick@soldbynick.com

626-269-2751626-269-2751 main

RE/MAX Masters Realty

1030 Bonita Ave. La Verne, CA 91750 | BRE#01398872 |Office BRE#01064901

Reviews

5deancc78

Nick's overall ability to identify what his client is looking for in his/her home is second to none. He is very knowledgeable in all aspects of the home buying/selling process. If you’re looking for a real estate agent that is honest, knowledgeable, and... (more)

5ANaka

Nick is a plethora of knowledge when it comes to real estate. He is a very good communicator and always keep you in the loop. He is also very proactive and on top of things. He knows how to accommodate your needs and doesn't waste your time showing you... (more)

5jeff_ims

Nick patiently worked with us two months until we found just the right home to buy. When it came time to make an offer it was then that his deftness and wisdom made themselves apparent. Real estate transactions involve lots of detail, lots of money, and... (more)

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