Flush with cash, Chinese homebuyers are flooding into the U.S. housing market, and paying top dollar.

“The Chinese came out really huge in the past year,” said Jonathan Miller of Miller Samuel, a New York-based appraiser.

Top 5 countries for foreign buyers of U.S. homes
Source: National Association of Realtors
Country % of sales to non-U.S. buyers 2013 Median price spent
Canada 23% $183,000
China 12% $425,000
Mexico 8% $156,000
India 5% $300,000
United Kingdom 5% $250,000

Chinese buyers accounted for 18% of the $68.2 billion that foreigners spent on homes during the 12 months ended March 31, according to the National Association of Realtors.

At a median price of $425,000, the Chinese are also buying more expensive homes than other foreign buyers, who spent a median of nearly $276,000 on U.S. homes. And nearly 70% of those pricey Chinese deals were made in all cash.

Nowhere is the influx of Chinese homebuyers felt more strongly than in California, where more than half of the homes sold to foreign buyers went to Chinese nationals.

Sally Forster Jones, an agent with Coldwell Banker International in Los Angeles, said Chinese are snapping up many of the trophy properties on the city’s Westside. She estimates that she’s sold about 10 multi-million dollar homes to Chinese nationals over the past 12 months.

“The uptick in sales to Chinese buyers started several years ago but it has increased dramatically lately,” she said.

Most of her Chinese clients are wealthy industrialists or real estate tycoons, many of whom spend less than half the year in the States.

“Some have children going to school in Los Angeles and use the homes as residences for them and [as a place] to stay at when they visit their kids,” said Jones.

China’s gross domestic product has grown by high single-digit, sometimes double-digit rates for the past 10 years, producing a lot of cash for the country’s top business people who view U.S. real estate as a safe and stable investment.

Rick Turley supervises real estate offices for Coldwell Banker in eight counties in and around San Francisco, including Silicon Valley. Many of his Chinese clients work in technology.

“The current hot spots are Palo Alto, Menlo Park and Cupertino, near Apple headquarters,” he said.

Inside NYC’s ‘billionaires building’

Most purchase the homes to raise their family and they pay special attention to the local school systems. Turley also has Chinese clients who buy homes for their kids. Last year, a family from Shanghai bought a condo for their daughter who was attending Stanford. The daughter has since graduated and now works at Google, he said.

Many Chinese buy homes through the U.S. government’s EB-5 Immigrant Investor program, which is considered a fast-track to getting a green card. To qualify, foreigners must invest at least $500,000 in a business that provides or preserves 10 jobs. This could be a home that is part of a bigger business project, such as a condo complex. Nearly 80% of all EB-5 visas went to Chinese nationals in 2012, according to the government.

Beyond California, sunbelt states in general are attracting a lot of foreign attention these days. Post-housing-bust bargains in resort and retirement areas like Las Vegas and Naples, Fla. have have gotten buyers from Canada, for example.

Four states accounted for 58% of all foreign sales. Florida had 23%, California 17% and Arizona and Texas 9% each. New York, an international business center and immigration gateway, and Virginia, close to the Washington corridors of power, both came in at 3%. To top of page

Freddie Mac: 30-year mortgage leaps to 4.46%, highest since 2011

By E. Scott Reckard June 27, 2013, 8:07 a.m.

A huge surge in mortgage rates, which according to Freddie Mac has lifted the the benchmark 30-year loan to 4.46%, is the biggest weekly increase since the financial crisis set in, rate watchers say.

Freddie Mac’s weekly survey, out Thursday morning, showed the average rate for a 30-year fixed loan jumping from 3.93% last week.

The 4.46% reading was the first to exceed the 4% mark since the week of March 22, 2012, and the highest since the week of July 28, 2011.

The average 15-year rate climbed to 3.5% from 3.04%, according to Freddie Mac, which polls lenders early each week about the terms they are offering to solid borrowers with 20% down payments.

The increase was triggered by expectations that the Federal Reserve would scale back its massive stimulus program, which involves buying $85 billion worth of Treasury notes and mortgage-backed securities per month.

Higher rates could restrain the heavy demand for housing that, according to the S&P/Case-Shiller survey, drove home prices in 20 U.S. cities up 12% in April, the biggest year-over-year gain in more than seven years.

That might not be such a bad thing, according to observers such as real estate consultant John Burns of Irvine. Housing markets, particularly in California, have begun to look overheated, he said, raising the prospect that another boom and bust cycle might be in the making.

“When home prices start rising 2% per month, which they have been in L.A., it becomes like a runaway train that you cannot stop,” Burns said. “Rising rates should cool the rate of price appreciation.”

Bankrate.com, which also monitors mortgage rates, said its survey showed the typical 30-year mortgage rate jumping from an average of 4.12% last week to 4.61% this week.

It was the biggest one-week increase since Lehman Bros., the big Wall Street firm, collapsed in 2008, ushering in the financial crisis, said Bankrate senior financial analyst Greg McBride.

The latest increase was “clearly an overreaction,” McBride said — but one that “shows how addicted to stimulus the markets are.”