US property loses allure for Chinese buyers (3)

Chinese investors consider buying overseas properties at a fair in Shanghai last year. [Photo by Bo Kelin/For China Daily]

Vacant homes

The increasing difficulty in obtaining a visa, along with being denied entry to the US, has resulted in more homes being left vacant in areas with a high number of Chinese, such as the San Gabriel Valley in Los Angeles County.

The empty homes prompted the city of Arcadia to ask owners who intend to keep their property vacant to disclose their contact information to at least two agents, following complaints that the properties were not being kept up to community standards.

Coco Tan, a broker in San Jose, California, said a key reason for the drop in home sales is the increasing difficulty in moving money out of China.

In 2015, amid concerns over capital flight, the State Administration of Foreign Exchange, the regulatory body, tightened the overseas transfer limit, imposing a cap of $50,000 a year on individuals.

"Last year, one of my clients failed to strike a deal because he couldn't get the money out. I have often heard about similar cases," Tan said.

Regulations have since become more stringent, said Tan, who has only met with a few clients from China this year, but not closed a deal. "I think the demand is still there. The only problem is how to get the money out," she added.

The situation in which wealthy Chinese buyers paid for properties in cash-thus raising prices-has changed. With the tightened regulation on capital outflow, buyers from China are now looking at lower-priced homes and taking out mortgages more often.

Some 46 percent of homes were being bought through mortgages in the 12 months to March, compared with 37 percent the previous year, according to the NAR report.

Wei, from the California Association of Realtors, said, "Chinese buyers are purchasing less-expensive homes compared with a year ago, and more of them are taking out mortgages, because less cash is coming out of China."

This change has affected the upper end of the market in particular. Tan said that in the past, many Chinese buyers targeted "luxury homes"-those worth $5 million to $10 million. "Now, such houses sell very slowly," she said.

Lo, the Los Angeles realtor, said people are still finding ways to get their money out of China and into the US-for example, through relatives and friends-but only $300,000 to $500,000 a year at most, to maintain their properties. "But I doubt they can continue to do that for long. It's impossible to move a large amount to invest in a new property," he said.