Spy balloons have been the primary media obsession in the tensions between China and the U.S., but the saber-rattling is also playing out in the real estate industry. A dozen U.S. states are looking to forbid real estate sales to Chinese companies or nationals. Texas is an example of this, considering barring Chinese nationals from buying property on national security grounds. Texas’ proposal would also bar Russians, Iranians, and North Koreans from owning real estate, but Chinese citizens appear to be the primary target.
Just under five percent of Texas residents are Asian, whether U.S. citizens with Asian heritage or those with green cards and permanent resident status. About 250,000 Texas residents are Chinese. Texas counts China as a significant trade partner, as 3.3 percent of Texas exports to the country, according to the latest data from 2019.
The Texas bill raises several legal questions. The ban would apply to individuals, even if they aren’t connected to the Chinese government, and it would even extend to Chinese citizens purchasing a home. That could be construed as discrimination against groups based on race and usurping the federal government’s primary role in managing foreign affairs. China has criticized the bills, saying they violate the market economy and international trade rules.
It isn’t just Texas that is enacting these kinds of restrictions. Florida Governor Ron DeSantis has also said his state doesn’t want real estate holdings by “hostile nations,” and Virginia Governor Glenn Youngkin has urged lawmakers to prevent “dangerous foreign entities” tied to the Chinese government from purchasing farmland, often close to military bases. Even progressive states like California have floated similar rules. Considering the impact of foreign investment in U.S. real estate, laws like this could hurt the real estate industry. But if tensions with China continue to flare, the arguments for the bans may find more widespread appeal.
