Homebuyers from China, attracted by the Bay State’s internationally renowned universities and colleges, are driving up luxury real estate sales in Massachusetts.
This high rate of international investment is helping Massachusetts outpace the rest of the nation in terms of luxury home sales, according to a recent study. “The RE/MAX Collection Luxury Housing Report” finds year-over-year luxury home sales – properties priced at $1 million and above – are up 14.6 percent in Massachusetts compared to last year. Meanwhile, the national rate of luxury sales is up by only 4 percent.
Chinatown, Jamaica Plain, Boston’s waterfront, and the North End are seeing the highest rates of growth, among all types of investors. In Chinatown, properties are not staying on the market as long as they used to. The RE/MAX report finds the average days on market (DOM) rate for Chinatown properties is 55 days in 2014 compared to 139 days in 2013, a 60 percent drop.
Paul Shao, a RE/MAX Sales Associate who specializes in Asian real estate markets, says the Commonwealth’s reputation as an education mecca is clearly a strong draw for Chinese buyers. “[They] buy in California, New York, and in Boston. We have the name-brand schools such as Harvard, MIT, and BU. They’re well known in [China].”
Chinese homebuyers make up 16 percent of international homebuyers in the United States, according to information from the National Associations of Realtors. Overseas buyers are more likely to pay cash (60 percent) compared to using a mortgage (38 percent), according to NAR’s data.
Financial security is another reason for the rise in Massachusetts investment. “In China, they’re concerned with [economic] instability,” says Shao. “One of the driving factors is that they’re trying to get their money out of China and into a more secure place.”
Chinese investors have already taken an interest in other parts of the country while Massachusetts has only recently started to see a strong growth in sales.
“They start with California because it’s closer to home. [They buy in] New York because everyone’s heard of New York,” says Shao. “In the last 2 years, we’re seeing more interest in Boston from the Chinese market.”
Linda O’Koniewski, co-CEO of RE/MAX Leading Edge confirms that Chinese investors are turning to the Bay State as a strong investment for their families. And many Chinese families buy in Boston as an early step in their long-term plans for their children’s educations.
“They’re looking at universities and schools first,” says O’Koniewski. “They come here to educate their kids. Some of our investors can’t wait to put their kids in Boston high schools when they’re 2 and 3 years old.”
Not surprisingly, O’Koniewski is extremely pleased with the news that luxury sales are on the rise and that Chinese buyers are settling down around the Bay State.
“They come for schools. They love how clean the city is,” she says. “They’re buying these homes as investements and securing a place for when their children go to high school or to Harvard.”