Hat tip to HB John for alerting us to the story on Ben’s Blog about the Chinese investors in America buying up U.S. real estate:
http://thehousingbubbleblog.com/?p=5602
It is just one story, but it talks about Chinese buying U.S. REITs, and also sending their kids here, who then marry an American – making it easier to buy U.S. real estate. Worth a read.
Very interesting article.
The people who live without borders-the Goldman Sachs types(GMS)-are only governed by their net worth. Where they make their money is less important than how they make it, and how much they make. The rest of us are forced to deal with the consequences of their bottom line decisions.
Since where we live and real limits are things most of the rest of us are acutely concerned about, I think the buying and selling of huge parcels of real estate by absentee land owners is something worth worrying about.
The housing bubble in the 1920’s and the current one, essentially destroyed neighborhoods. It uprooted vast numbers of people and created havoc throughout the rest of the economy.
What makes the current housing collapse so bad is that we’ve been here before and have little to show in the way of having learned something.
Our spot on Nightline west coast is going to get bumped by Ted Kennedy.
It’s a great time to buy.Smart people buy low and sell high.We are in a new era folks.Grab your piece of america before the rest of the world does.
So, that’s why wife married me!
azdude you should try to add something constructive or thoughtful every few posts
I know a few of these investors. I try to discreetly tell each one to keep their Yuan tucked under their mattress because it’ll be worth a lot more when they pull it out. Come back in 2010.
For citizens and permanent residents, it’s a whole different equation because of several tax benefits (even for all cash investors).
That said, a number of these “investors” are really buying houses for their children to go to school from. It’s only an investment in the sense that they’ll rent it out or sell after their children graduate. I’m serious, I’ve known dozens of families like this growing up.
In one example, I knew someone who lived in a $3 million home, had a chef, butler, driver, and a tutor. This is only an investment in terms of “recouping” costs. They’re actually losing money if they don’t count the benefit of a US education for their children. That said their parents made the right move, seeing as how it was either this or become Chinese subjects (They were from Hong Kong, back when it reverted to China).
Oh, and they were 100% cash.
The Chinese got it going on don’t they! They are like the Russians and us combined in our own hay days of yesteryear. With our US debt going to 17 trillion estimated by the end of Obama’s second term, China should own us completely by then!
Like he says, “Japanese Redux”. People said the same thing when the Japanese were running high in the eighties. Nothing to worry about, they’re having their turn in the sun.
We should be pleased that they are putting cash into the US. Obviously they recognize that there are deals here to be had right now.
The Chinese and Russians are actually taking cash out of US debt. It’s compensated for other countries, and has more to due with currency vs. yield than anything else. I.e. Yen and Yuan actually appreciate under your mattress, unlike most currencies of the world.
All I know, is that once my inheritance is mailed to me from a great uncle in Nigeria, I’m retiring. Gee, I sent them $1200 3 weeks ago as a processing fee, so should be any day now.
Jim, how’s your Mandarin? 🙂
It was interesting to read that blog on Chinese people/agency investing in U.S. real estate. I read a book in 2006 called Crash Proof by Peter Schiff. He correctly predicted the bursting of the housing bubble as well as our general economic meltdown. He also wrote then that Chinese investors would come in later and start buying up our real estate, pretty much for exactly the reasons mentioned in the blog. It’s fascinating to watch that play out now- especially considering how many people in the financial media tried so hard to paint Schiff as a crackpot before the bubble burst.
China will have the fortune of living through a lost decade soon enough. Whoring kids out in order to buy RE is one of the funnier things I’ve heard in a while.
Is it really like Japanese redux? Japanese brought all their stuffs during the bubble and at the peak. Chinese is moving in after the crash and near the valley. At this point, buying US treasures is riskier because the exchange rate changes could literally wipe out your gain plus more. Also, Chinese believes in controlling lands controls the worth of the nation.
Also culture wise, Chinese is a lot less xenophobic than Japanese. That’s why you will find less objections if a rich Chinese son want to marry a woman of other race. Also, if you know a little bit about Chinese history, you will realize that the current Chinese culture is the mergers of several foreign Asian cultures assimilated by the Han Chinese culture (the five great culture mergers). As a closet Trekkie, I always thought the Borg is model after Chinese “We are Borg. You will be assimilated. Resistance is futile.” LOL
All we care about is if you make grandkids. You can marry a white man/woman, you can be gay, but you must have grandkids. No kidding.