You’ve seen the flashy cars, designer handbags and jaw-dropping houses. Ostentatious displays of wealth have become synonymous with overseas Chinese — Boston Magazine declared the city to be “China’s Town” in its September 2014 issue. If rich Chinese are flooding the market, local buyers are facing fierce competition.
Broker associate Richard Ho of Remax Andrew Realty Services would beg to differ. While there certainly are investor buyers with deep pockets, there are also a fair number of Chinese buyers who just want a home. They may not be the wealthiest in their home country, but find Boston property affordable for their children attending college or graduate school.
“Compared to that part of the world, we’re very reasonably priced,” Ho said. “In Massachusetts, $600,000 gets you a nice house. In Singapore where I’m from, you’re lucky to get a two-bedroom apartment. Southeast Asian real estate in Hong Kong, Beijing and Shanghai are even more expensive than Singapore.”
As the market heats up, overbidding and all-cash deals have become the norm in hot neighborhoods near top universities or good school districts. Boston home values have gone up 6.8 percent over the past year, as the median listing price in Boston was $519,000, with the median sale price at $524,500, according to real estate search site Zillow.
“If you look at metro Boston or Boston proper, such as Allston/Brighton, nine out of 10 potential rental properties will go for above asking,” said Jason Yung, real estate agent at East Coast Realty.
As Boston rental values climb, it makes more sense to buy. The median rent price in Boston is $2,595, while the Boston metro median rent is $2,371, according to Zillow. In 2014, 16,147 Chinese nationals studied in Massachusetts universities, representing 28.2 percent of all international students. This does not include Chinese students from Hong Kong, Taiwan or Singapore.
“Most colleges require first-year students to live on campus,” Ho said. “But after that year, the parents don’t want to pay rent, so they buy a one- or two-bedroom condo. At the end of the child’s college education, they can sell it and make a profit.”
The appetite for prime real estate isn’t limited to foreign nationals, as locals are getting in on the action.
“The local homebuyers do have the cash to buy,” Ho said. “Because of the lack of inventory this year plus speculation about the Fed raising rates, the market sprung up really early this year in end of January, rather than in February or March. Even with the storms and snow, people are shopping for houses.”
Boston and Middlesex County were ranked among the top 10 housing markets by real estate search site Trulia. However, high rents combined with newer properties being rental-only limit buying options.
“In 2008, the market dropped and property management companies bought up a lot of properties in the priciest rental markets, such as Fenway,” Yung said. “Boston also doesn’t have rent control, so some corporate landlords increase rent by 10 percent every year.”
Another impact on Boston’s housing market is lending policies. Most mortgages require buildings to be 50 percent owner occupied, which makes it difficult for buyers to get mortgages.
“The Chinese are not the biggest factor, compared to the overall market,” Yung said.
There is demand for housing in greater Boston, but attributing the growth to Chinese buyers alone is unfounded. As the region continues to draw the best and brightest, Boston will experience growing pains.
This post is also available in: Chinese