Hat tip to daytrip for sending this in, from cnbc.com:
At a brand new housing development in Irvine, Calif., some of America’s largest home builders are back at work after a crippling housing crash. Lennar, Pulte, K Hovnanian, Ryland to name a few. It’s a rebirth for U.S. construction, but the customers are largely Chinese.
“They see the market here still has room for appreciation,” said Irvine-area real estate agent Kinney Yong, of RE/MAX Premier Realty. “What’s driving them over here is that they have this cash, and they want to park it somewhere or invest somewhere.”
Yong’s phone has been ringing off the hook, with more than 5,000 new homes slated for the nearby Great Park Neighborhood. Most of the calls are from overseas, but prospective buyers are not looking solely for financial returns on the real estate.
“We are seeing a lot of Asians who are buying as an investment, but their kids are going to school here, so kids live in the home. They are looking at it more as an investment in education,” said Emile Haddad, CEO of Fivepoint Communities, developer of the Great Park Neighborhood.
That is Brian Yang’s plan. Speaking from his home in China, Yang said he purchased a home in Irvine this year, but he will wait five years, until his daughter turns 10, before moving his family to the U.S. He has several reasons for taking the leap.
“Education in America is very good and world class, so the first one is for education, and I think the second one is for the property appreciation,” explained Yang.
While American secondary schools and universities are a big draw for the majority of Chinese buyers in California, Yang, and many of his colleagues, are also concerned about China’s political instability, inflation, even pollution. They are paying all-cash for real estate in California, using it as a safe-haven for their wealth. Yang was reluctant to talk about the money, but he admitted, “I feel the same way to some extent.”
For now, Yang is renting out the four-bedroom home, and, he said, getting a 5 percent return on the investment.
The Chinese are supposedly limited to expropriating a maximum of $50k/yr so what we are seeing here are the very most affluent/connected diversifying and using their elite status. Of all the things the rich Mainlanders could buy I am most comfortable with residential real estate for personal use.
I don’t buy the education bit however. The money we are discussing is more than enough to purchase any spot anywhere.
As Robdawg suggests there are numerous ways of getting around the $50K/yr limit which are all pretty well established, routine and generally tolerated by the government. For those who have it and want it moved, the money will be moved, no problem.
Irvine ticks alot of boxes for the Chinese, as do places like Carmel Valley, Penasquitos, West RB and Miramar Ranch. Of course these places tick alot of boxes for many nationalities/ethnicities… Nevertheless the demographic in these areas is increasingly Asian (broadly, not just Chinese), which is a testament in support of the census figures that North County growth since 2000 has been driven by Asian and Hispanic inflow.
Happening in Napa as well.
“but he will wait five years, until his daughter turns 10, before moving his family to the U.S.”
Not counting the illegals who cross the border … since when can you just decide that you will come to the US at a certain date? How are all these Chinese buyers getting into the US? Tourist visas, work visas, green cards??