Henry Nunez, a real estate agent in Arcadia, California, met with so many homebuyers from China that he bought a Mandarin-English translation app for his phone.
The $1.99 purchase paid off last month, when he sold a five-bedroom home with crystal chandeliers, marble floors and two kitchens, one designed for smoky wok cooking. The buyers were a Chinese couple who paid $3.5 million in cash.
"Last year, it would've been $2.8 million," said Nunez, a property broker for 27 years in the city 20 miles (32 kilometres) east of Los Angeles. "The biggest driver is a lot of people wanting to invest their money here."
Buyers from Greater China, including people from Hong Kong and Taiwan, spent $22 billion on US homes in the year through March, up 72 per cent from the same period in 2013 and more than any other nationality, the National Association of Realtors said on Tuesday in its annual report on foreign home purchases.
That's 24 cents of every dollar spent by international homebuyers, according to the survey of 3,547 real estate agents.
Chinese purchases of US homes are likely to continue increasing as the country's swelling ranks of affluent consumers seek refuge from pollution and political and economic uncertainty, according to Thilo Hanemann, who tracks cross-border investment for the New York-based Rhodium Group.
"A lot of people are trying to hedge against a generally bearish outlook for the Chinese economy," Hanemann said in a telephone interview. "Buying real estate overseas has been in the past limited to a relatively small group of wealthy individuals and sometimes government officials. But it's become a much bigger trend, involving affluent middle-class people."
Higher pricesChinese buyers paid a median of $523,148 per transaction, compared with a US median price of $199,575 for existing-home sales. While Canadians bought more houses than the Chinese, they spent less -- a median of $212,500 per residence, for a total of $13.8 billion.
Publicly traded builders are responding by catering to Chinese buyers in areas with high demand. Brookfield Residential Properties staged feng shui blessing ceremonies before beginning work on projects in Anaheim and Foothill Ranch communities in Orange County, south of Los Angeles. The New Home Company consulted with a feng shui master on the land plan for its Orchard Park development in San Jose, California, that opened in April.
California demandCalifornia is the most popular US destination for Chinese real estate buyers, according to Juwai.com, a Hong Kong-based property search engine.
Chinese bought 32 per cent of homes sold to foreign buyers in the state, double the share sold to Canadians, according to an April survey by the California Association of Realtors. About 70 per cent of international buyers pay cash, the survey showed.
"The uncertainties in China's domestic market are contributing to a higher rate of growth in Chinese interest in US property," Andrew Taylor, co-chief executive officer of Juwai.com, said in an email. "That interest began accelerating in the second quarter of 2014, in part because of China's property slowdown."
New-home prices in China fell in June for a second straight month as a slowing economy and excess supply deterred buyers, according to the China Real Estate Index System Survey. In Hong Kong, new-home prices have dropped by 15 per cent to 20 per cent since October, according to a JPMorgan Chase & Co report last month.
US house prices have climbed 26 per cent since March 2012, after falling 35 per cent from their June 2006 peak, the S&P Case-Shiller Index of 20 cities shows.
New constructionBuyers from China are driving up prices and fueling new construction in Southern California areas such as Arcadia, a city of about 57,500 people with top-rated schools, a large Chinese immigrant community and an array of Chinese restaurants and markets.
The median home price in Arcadia's 91006 ZIP code was $1.28 million in May, up 18.5 per cent from a year earlier, according to research firm DataQuick.
"About 90 per cent of my buyers are from China," said Peggy Fong Chen, a broker with Re/Max Holdings, who sold 80 homes in Arcadia last year. "They want new construction. They want two levels. In China, it is considered a mansion if it has two levels."
More than three out of four buyers pay cash, said Chen, a native of Hong Kong who's been selling real estate for 10 years. At least 20 per cent are absentee owners who don't have long-term visas yet. Many purchase houses for their children to attend high school or college, she said.
Tearing downChinese investors are moving into development in Arcadia, Chen said. They are buying lots with homes built in the 1970s and '80s, tearing them down and erecting sprawling houses like the one Nunez sold for $3.5 million, which has a double-height entry hall and wood-paneled library.
"Local people really cannot afford these most of the time," Chen said.
While buyers may be driving up prices in some pockets, the wave of money is good for local economies, said Hanemann of Rhodium Group. Arcadia issued building permits for 167 single-family homes worth $120 million in the fiscal year ended June 30, contributing to a 71 per cent annual gain in construction fees for the city's Community Development Division.
"It's a huge opportunity for builders and of course it's a huge opportunity in terms of bringing in real economic investment that's creating local jobs," Hanemann said. "If the US is able to respond and provide the supply, it's a very positive thing."
Chinese blogBuyers from China and Asian-Americans purchased about 80 per cent of the 47 houses sold at Tri Pointe Homes's Arcadia at Stonegate community in Irvine, about 40 miles southeast of Los Angeles, according to Tom Mitchell, president of the Irvine-based builder.
Almost half of the buyers paid cash for houses in the development, at prices starting at $1.16 million, he said. The company has been surprised by how word travels among overseas buyers.
"A Chinese national bought one of our houses at Arcadia in Irvine after reading about it on a blog," Tri Pointe CEO Doug Bauer said in a telephone interview. "It was a Chinese blog. We couldn't even read it."
Five bedroomsHui Hui Huang, a Taiwanese lawyer based in Shanghai, agreed last week to buy a five-bedroom Tri Pointe townhouse in San Mateo, near San Francisco International Airport, for $1.38 million. She and her husband were looking for a US home as they develop a smartphone app to help diabetics better monitor insulin levels.
"We said, 'Wow, this is really attractive and serves our needs,' " said Huang, 39, who went to law school in San Francisco with a classmate who also bought in the project.
Even as prices climb, US real estate remains a relative bargain for Chinese investors, according to William Yu, an economist at the University of California at Los Angeles's Anderson School of Management.
Two-bedroom condominiums in Shanghai's Pudong district cost about $1 million, almost twice as much per square foot as condos in West Los Angeles, according a report by Yu last month. The Pudong units command $1,400 a month in rent compared with $3,300 in Los Angeles.
"From an investor's point of view, it's better to be a landlord in LA than Shanghai," Yu said in a telephone interview. "If you compare the rent-to-income ratio, it's much better in Los Angeles than Shanghai."
China limitSome wealthy Chinese have come up with ways to evade the yearly $50,000 per-person limit on taking money out of the country so they can buy US real estate, Yu said. Methods include laundering money through Macau casinos and cooking the books of import-export companies, he said.
"A lot of people over-invoice export proceeds, so they can park some money outside," Ha Jiming, chief investment strategist for Goldman Sachs Group's China investment management division, said at a Los Angeles conference in April.
Sales of US houses to long-term foreign residents and non-resident buyers accounted for about 7 per cent of the $1.2 trillion of existing-home transactions in the year through March, the National Association of Realtors said.
Growing shareChinese and Canadians were followed by buyers from India and Britain, with investors from each of the countries spending $5.8 billion on US homes. Mexicans spent $4.5 billion, making them the fifth-largest international buyer group.
The share of money arriving from China is likely to keep growing, according to Lawrence Yun, chief economist for the Realtors.
"It's just the beginning of a tidal wave," he said in a telephone interview.
Overseas buyers are changing Arcadia, according to Nunez, 55, who has lived in the city since he was 6.
"You drive every street and there are three or four new houses being built," he said. "It's just incredible, the demand."