The Chinese Take a Dragon Leap in US Home Market Looking to get their children into top colleges, Chinese now the fastest-growing group of foreign buyers of US homes

They are increasingly rich, hungry for the good things this country has to offer, buying high-end homes, and don't mind paying huge amounts of cash up front to get them without going into debt. If you don't think this reads like a typical American story today, you're right—these new homeowners are Chinese living in the US. For a housing market just starting its recovery, foreign investment in US residential real estate has been a bright spot, and there's no sign of the trend letting up. According to data released last month by the National Association of Realtors, non-US buyers accounted for $82.5 billion in residential property sales in the 12 months ended March 2012. Chinese purchasers made up 11% of this total while Canadians continued to represent the largest swath at 24%. Perhaps even more striking is the fact that 27% of Realtors surveyed by the NAR reported working with international clients in the last year. Along with China and Canada, buyers from countries including Mexico, India, and the UK combined to make up 55% of purchases from abroad—mainly concentrated in Florida, Texas, Arizona, California, and New York. The fastest growth in recent years is among Chinese buyers. The global interest is driven by several different factors, yet for the Chinese in particular, the chance to get their children into top universities is probably the largest motivation. To Chinese parents, the opportunity provides proof that their years of effort have paid off. "The Chinese work very hard—it's part of their culture," says Cathy Zhao, a real estate broker in Maryland who has served many wealthy Chinese clients. "For them, the most important thing is education, and with prices being very low as they are, they see a chance to get near a good school." And once here, most international buyers want to stay, Zhao adds, because their chance of a better-paying job is still better in the US than back home. The chance to earn a prestigious degree is not the only reason Chinese buyers find the US market increasingly appealing. "There is an increasing number of wealthy Chinese who are buying in the US to diversify their portfolio," says NAR economist Jed Smith, who helped compile the annual survey. "Even with the rally in recent months, homes here still look very good from an investment point of view." Unlike Japanese corporations in the 1980s, which bought at the top of the market in their quest for big-name commercial properties, the Chinese are more interested in good deals. With residential real estate prices still almost a third less than they were at their peak in 2007, it's a strategy that may well pay off if job growth returns and triggers a rally in the housing market, according to Smith. Last year, the average price of a foreign-purchased US home was more than $400,000, which is double the national average—so the search for good value might only extend so far. That high figure becomes even more impressive when one considers that buyers from abroad often lack credit scores and access to mortgages, and frequently opt to pay the whole price up front. "[S]ales transactions can often be completed quickly as many Chinese purchasers prefer all-cash deals," Pamela Liebman, CEO of Corcoran Group, a New York real estate firm, writes in an email. Liebman also says her company has serviced more Chinese clients this year than at any time in the past, and that their interest is not just in residential real estate but in commercial property as well. But foreign buyers still make up a small part of all US sales, accounting for just 4.8% of the total dollar amount in the last year.