We came across a piece up on “Forbes” in which its writer argues that real estate is the new gateway to the Ivy League for international parents. Essentially, the writer argues that more and more families, particularly Chinese families, are parking their money in real estate in places like Manhattan so their children can attend elite American high schools before going off to elite American universities, universities that are more inclined to admit foreigners who attended high schools on U.S. soil. And while the writer is absolutely spot on that many Chinese families do indeed park their money in American real estate and many Chinese students are in fact studying at American high schools, including in Manhattan, we respectfully disagree with the suggestion that this is a new gateway to the Ivy League for international families.
Chinese Investment in NYC Real Estate is Falling
As Laura Kusisto reports in a July 2018 piece entitled “Record Drop in Foreigners Buying U.S. Homes” for “The Wall Street Journal,” “Foreign purchases of U.S. homes had their biggest drop ever, bringing relief to waves of American house hunters who have struggled to compete in affluent neighborhoods with wealthy buyers from abroad. Purchases by international buyers totaled $121 billion in the fiscal year ended in March, down from $153 billion the previous year, according to a survey by the National Association of Realtors released Thursday. That 21% decline was the largest on record, the NAR said. The drop in foreign interest helps well-heeled buyers in places like Manhattan, Seattle, San Francisco, Miami, and Orange County, Calif.”
Kusisto’s piece continues, “‘This might be the first time in my career that I’m seeing more Chinese sellers than buyers,’ said John Chang, a broker-owner at Engel & Völkers in New York City. Mr. Chang said his clients have watched prices rise sharply in recent years and determined that now is their opportunity to ‘cash out.’ On a trip to China last week, Mr. Chang said he realized that Chinese news coverage of the U.S. is spooking would-be buyers. ‘It’s staggering,’ he said of the negative coverage, including editorials saying now isn’t a safe time to invest in the U.S. and articles chronicling real-estate developments funded by Chinese investors that have gone bankrupt. Chinese buyers remained the largest purchasers of U.S. homes but their purchases fell 4% from the previous year to $30.4 billion.”
Chinese Investment in American Real Estate Isn’t a New Trend
In a slumping real estate market with fewer Chinese buyers, the suggestion that “real estate is the new gateway to the Ivy League for international parents” leaves us scratching our heads. But we’d add that we’re not just scratching our heads because many Chinese buyers are becoming hesitant to invest in U.S. real estate with a looming trade war between the U.S. and China. It’s also because it’s not ‘new.’ At Ivy Coach, we’ve been helping Chinese families send their children to U.S. high schools, including boarding schools, for over two decades. And, over the years, we — a concierge service — have helped many of these families pursue investments in our real estate market. New? No, it’s not new.