Dive Brief:
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The free fall of the Chinese stock market could affect U.S. homebuilders beyond the pain of their own falling stock prices, as market observers ask: Will Chinese investors who buy homes here make future purchases?
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Chinese homebuyers account for 2% of U.S. home sales, John Burns, CEO of John Burns Real Estate, wrote in a blog on LinkedIn on Monday. The Chinese make up 16% of all international homebuyers and spent $29 billion on U.S. property last year — more than Canadians.
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Burns reported that the Chinese market correction also has led to weaker U.S. purchasing activity, and has caused some buyers to cancel sales as they lost money in their stock market.
Dive Insight:
The impact could be greatest in big cities with easily accessible airports, where Chinese investors buy the most homes. For example, 39% of foreign buyers who purchased homes in Manhattan last year were Chinese, Burns wrote.
One reason: A booming Chinese economy has created scores of millionaires in that country over the past decade and a half.
Still, Burns noted, it is possible that economic woes in China will encourage its wealthiest citizens to buy more U.S. homes in an effort to shield their money from the unstable Chinese stock market.