Although the Bay Area has always attracted foreign home buyers, anecdotal evidence suggests that their numbers are growing, creating even more competition in areas where demand has far outstripped the supply of new homes. The boom is partly because of globalization, but mostly a result of the tremendous buildup of wealth in developing countries, especially China, which had 2.4 million millionaires in 2013, up 60 percent from the year before, many of these millionaires want to diversify their assets outside of what is still a communist country
?Maybe 20 percent of the deals in San Francisco and the Peninsula are cash overseas buyers,? said Allen Ching, president of the San Francisco/Peninsula chapter of the Asian Real Estate Association of America. ?I can only see that increasing.?
?In very, very specific places, (foreign buyers) are important, but in the overall scheme of things they are not,? said Richard Green, director of the University of Southern California Lusk Center for Real Estate. In Southern California, hot spots include Irvine, the Los Angeles County cities of San Marino and Arcadia, and ?the San Gabriel Valley in general,? Green said.
Across the Bay Area, ?the percentage of foreign buyers is probably 15 percent, and Chinese is probably half of that,? said Mark McLaughlin, chief executive of Pacific Union. ?If you go to Palo Alto, north of 25 percent (of buyers) are Chinese. In San Francisco, it?s 15 to 20 percent Chinese. In Marin, it?s probably 3 percent. In Sonoma, it might be zero.? Berkeley gets some foreign buyers because of the University of California.
DeLeon Realty of Palo Alto also created a division to market in Asia. ?We hired someone who grew up in China to promote our listings to the Chinese community,? says founder Ken DeLeon. His firm bought a 14-seat Mercedes bus to take Asian buyers on tours of Peninsula homes for sale.
It?s not unusual for foreign buyers to take a one-week home-buying trip to the Bay Area. Some purchase sight unseen. Lota De Castro, an agent with Paragon Real Estate Group in San Francisco, said she closed on a King Street studio with a buyer in Singapore who ?transacted the business by e-mails and phone calls and (has) not physically seen the unit.?
Some foreign buyers see houses not as a place to live, but as investments outside their home countries. ?They look at real estate as an asset class,? says Jeffrey Needham, a senior vice president in San Francisco with HSBC, a global bank.
Some Chinese are purchasing Bay Area homes so their kids can attend school here. DeLeon had a client ?buy a million-dollar-plus home in Palo Alto for a 2-year-old who they anticipate getting into Stanford,? he said.
