With investors nervously watching the Shanghai stock market, Chinese are the now biggest foreign buyers of American real estate, and they are setting their sights on the biggest state in the Lower 48.
Texas is seeing a huge influx of Chinese buyers, both investors and owner occupants, thanks to more affordable housing. And recent turbulence in China's stock market is likely to boost demand for U.S. property, not hurt it.
"My schedule is very full. Sometimes I cannot handle more," said Shirley Mei Qing, a real estate agent with Keller Williams in Houston, adding that she's seen a 30 percent increase in Chinese clients in the past year. "The main reason is the house market here — comparably, the price is better than the East and West Coasts."
Chinese buyers have poured $28.6 billion into U.S. real estate in the past year, more than double the amount spent by Canadians, the second most active buyers, according to the National Association of Realtors.
California is still a Chinese favorite, but high prices there are cutting into demand. While Texas ranks third for all international home buyer demand, behind Florida and California, it is favored by Chinese buyers, thanks to its strong employment and education opportunities. Chinese accounted for 31 percent of international sales in Texas in the past year, second only to Latin American/Mexican buyers.
The serious volatility in China's domestic stock market — shares in Shanghai plunged 8.5 percent on Monday and lost more ground overnight — is seen as increasing demand for U.S. real estate, not hindering it.
"While investors in the Chinese stock market have certainly experienced a negative hit to their net asset positions in recent weeks, since the Chinese yuan is essentially pegged (within a narrow floating band) to the U.S. dollar, any pass-through effect to the exchange rate is not visible," said Svenja Gudell, director of economic research at real estate site Zillow. "Investors in Chinese equity markets will flee to safe assets, and few assets offer the combination of relatively modest risk and high returns as U.S. real estate. It is very plausible that China's stock market volatility could push more Chinese investors to buy homes in the U.S."
Not only are Chinese buyers of U.S. real estate looking for a safe haven for their money, they also want to live here, work here and educate their children here.
"About 10 percent of my business, on either side of any transaction, is Chinese," said Michele Marano, a real estate agent with Champions Real Estate Group in Houston. "I get students. Rice (University) is a big influential school with the Chinese. I get the energy clients, a lot of engineers. The ones I'm involved with are typically under 40."
Marano said that because there's already a large Chinese population in Houston, it's becoming more familiar to family and friends in China. Home prices in Texas are soaring, with Dallas, Houston, San Antonio and Austin all reaching new peaks in May, according to Black Knight Financial Services.
And Chinese are willing to spend more. The average price of a home purchased by a Chinese buyer in the last year was $831,800, according to the Realtors association. That is four times the national median home price and far higher than any other international cohort's average purchase price.
Texas ranks number one in new home construction in the United States, and Chinese have long favored new over existing homes. Witness a massive development in Irvine, California, that continues to be fueled overwhelmingly by Chinese demand. Texas is about twice as large as California in total home production, according to the National Association of Home Builders.
U.S. homebuilders have been designing more multigenerational homes with an eye toward larger, immigrant families. Some have adopted Feng Shui floor plans to attract Asian buyers