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Chinese pouring billions into U.S. real estate: study

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It's the same situation where I come from in Australia. Chinese investors account for 20% of all new property purchases, and I heard that in Auckland last year 40% of all real estate sales were to Chinese nationals. This has really driven up the price of property, with 20%+ increases in many areas. The biggest complaint among first home buyers is that a large portion of the foreign buyers are simply 'parking' their purchases until the market really peaks, leading to a huge number of vacant properties all over the place (which in turn lock local buyers out of the market).

The problem the Chinese government is now battling with is the fact that there are currently over 64 MILLION vacant dwellings in China, with many regions becoming 'ghost cities'.

8 ( +9 / -1 )

with so many buyers from china, the home prices went up high even middle class citizen can not afford to buy a home, even though saved up down payment but then chinese buyers paid cash and over the market price to get the properties. lot of people suffered from it.

6 ( +6 / -0 )

Here is the problem. Investments in the U.S. provide another advantage: a pathway to a green card. Chinese investors have been particularly aggressive at using a federal visa program called EB-5 that allows overseas citizens to put half a million to $1 million into a project that will create at least 10 jobs. Investors can get a green card in about two years. So far this year, close to 90 percent of the EB-5 visas issued worldwide have gone to Chinese.

3 ( +4 / -1 )

Here is the problem.

Millions of investment and job creation is a problem?

-1 ( +6 / -7 )

See this in Vancouver as well. Outrageous prices paid by a locally-based Chinese buyer , who returns to China to sell it at a profit to another Chinese, who may then turn around and sell it at more profit to yet another Chinese person.

Meanwhile these million-dollar houses fall apart on unmaintained lots, creating local eyesores and pricing new home buyers out of the market at the same time.

9 ( +9 / -0 )

sighclops,

Same thing is occurring in Canada, more specifically, Vancouver and Toronto. Chinese buyers are pushing home prices out of reach of Canadian citizens.

12 ( +12 / -0 )

Money runs the world. So which. The 1 % or chinese investments. No use criticizing if cant offer solutions. Dont matter. Everybody happy with chinese investments. This negative feedback are useless anyway.

-3 ( +1 / -4 )

StrangerlandMAY. 17, 2016 - 09:53AM JST Millions of investment and job creation is a problem?

Director, Division of Enforcement from the investigations of EB-5 projects, half of which uncovered fraud. There is a possibility of unclean money being used to fund the EB-5 investments by aliens. EB-5 funds are supposed to be spent in depressed areas, such as properly selected TEAs. However, it's not happening. The regulations gave the states total control of this economic mapping. Grassley, Leahy, Sessions, and Perdue, were clearly worried about the extent of fraud and national security problems, as well as the heavy urban tilt in the use of the moneys.

2 ( +4 / -2 )

Everybody happy with chinese investments.

Chinese and bankers, yes. The Canadian middle class, no.

11 ( +11 / -0 )

Director, Division of Enforcement from the investigations of EB-5 projects, half of which uncovered fraud. There is a possibility of unclean money being used to fund the EB-5 investments by aliens. EB-5 funds are supposed to be spent in depressed areas, such as properly selected TEAs. However, it's not happening. The regulations gave the states total control of this economic mapping. Grassley, Leahy, Sessions, and Perdue, were clearly worried about the extent of fraud and national security problems, as well as the heavy urban tilt in the use of the moneys.

That sounds like a problem with how the investment is being handled. I ask again, what specifically is the problem with millions of dollars of investment into the country, and job creation?

-6 ( +3 / -9 )

trangerland MAY. 17, 2016 - 10:07AM JST I ask again, what specifically is the problem with millions of dollars of investment into the country, and job creation?

Other than increase in minimum wages and lower the standard of living, USCIS is ill-equipped to review business plans, job-creation studies, and securities offerings. The SEC retains the power to police fraud. What that means is the agency has no mechanism to sniff out a problem until it has exploded, at which point the agency can only clean up the mess.

0 ( +3 / -3 )

Like I told people back in the mid 80's when Japanese companies were buying up a lot of high value U.S. properties and a lot of people were complaining..... the property is going no where and now they own the right to pay U.S. Real Estate taxes. Eventually, most of the Japanese companies ended up selling those properties at a loss.

5 ( +5 / -0 )

Be thankful. The Chinese are buying at high prices like the Japanese did in the 1980s. Pumping in capital and investments, creating lots of jobs for Americans, Australians, Canadians, etc. Without these additional investments, the economic growth and markets of the Anglo-Saxons' will be much lower. Stop complaining.

-4 ( +3 / -7 )

Canda and Australia are having the exact same problems, although Australia has made all future purchases by foregners on new buildings/property only. Australia has a housing shortage meaning very high median prices and ridiculous rents

4 ( +5 / -1 )

One must feel the irony, Chinese buying the US land, maybe they want to see that new great wall of China knockoff that Trump promised to raise once elected president.

0 ( +3 / -3 )

Other than increase in minimum wages and lower the standard of living, USCIS is ill-equipped to review business plans, job-creation studies, and securities offerings. The SEC retains the power to police fraud. What that means is the agency has no mechanism to sniff out a problem until it has exploded, at which point the agency can only clean up the mess.

Again, a management problem. I'm still not seeing the problem in millions of investment, and job creation.

-8 ( +3 / -11 )

People of communist China fully embracing capitalism in the west, playing the free market, supply/demand game that the West touts, and people are complaining. You know what, it's the have-nots that are unhappy. Talk to the long time owners of properties in those hot markets and I bet they're grinning ear to ear.

-4 ( +0 / -4 )

One must feel the irony, Chinese buying the US land, maybe they want to see that new great wall of China knockoff that >>Trump promised to raise once elected president.

To feel like "finally we are home".

0 ( +1 / -1 )

When the Chinese, by their sheer numbers begin to remodel society, will we be so happy that our children must adapt to Chinese culture abroad?

3 ( +3 / -0 )

There was an article about that in oz smh today. Its now more difficult for Chinese to obtain loans from oz banks hence their switch to the us market.

Am philosophically against most kinds of speculative real estate investments, from foreigners or locals. Good luck to the us, we have been through that in oz, not fun being priced out by rich Chinese who do not even want to live here.

3 ( +3 / -0 )

sighclops - and I heard that in Auckland last year 40% of all real estate sales were to Chinese nationals.

Yet official data puts foreign buyers at 3% of the national total. Government is suggesting it could be more like 5%. It might be higher but no way is it even close to 40%. People buying as investment properties are the real problem.

3 ( +3 / -0 )

Talk to the long time owners of properties in those hot markets and I bet they're grinning ear to ear.

Not necessarily - a lot of them have seen the values of their houses rise significantly, which has led to a significant increase in their property taxes, without an increase in their salary. So while their net worth has increased, their expenditure has as well, but if they sell their houses, they are going to have to pay just as much to buy a new one somewhere else, so it's not like they can escape these property taxes.

1 ( +5 / -4 )

Anything to get their money out of China 1. away from the government there 2. to hide proceeds of corruption 3. because nothing to invest in China that will make money and 4. the big crash coming in China

6 ( +7 / -1 )

A coworker sold his home purchased to a Chinese individual, about 30 years ago. The Chinese person paid for the whole shebang at one shot, with a suitcase full of cash.

1 ( +2 / -1 )

StrangerlandMAY. 17, 2016 - 12:34PM JST but if they sell their houses, they are going to have to pay just as much to buy a new one somewhere else, so it's not like they can escape these property taxes.

Not really. If you have been a principal residents of your property for two years or more, any small or large capital gains up to $250,000 or $500,000 is tax free. This is something you can do every two years. Many use this advantage to live or retire in a lesser priced areas. If you have prop. 13, the property tax is limited to 3 percent increase per year.

4 ( +4 / -0 )

It's been happening near my hometown. Most of them buy small houses, tear them down, and build mini mansions. Fortunately, my hometown has been stopping this from happening.

5 ( +5 / -0 )

If you have been a principal residents of your property for two years or more, any small or large capital gains up to $250,000 or $500,000 is tax free

That would depend on the country and locality.

1 ( +3 / -2 )

StrangelandMAY. 17, 2016 - 03:11PM JST That would depend on the country and locality.

If you didn't know, the subject is about "Chinese nationals became the largest foreign buyers of U.S. homes last year".

Another thing that you probably already know but didn’t specifically mention is that the IRS allows for the combination of the 1031 exchange and the $250k/$500k cap gains exclusion. That makes your scenario even better, because you can step up the basis in the new property by the amount of the section 121 excluded capital gain. That basis can then be depreciated in the new property, and/or will reduce the amount of cap gains you pay if you sell the new property.

4 ( +4 / -0 )

If you didn't know, the subject is about "Chinese nationals became the largest foreign buyers of U.S. homes last year".

The comment I was replying to was not specifically about the US:

People of communist China fully embracing capitalism in the west, playing the free market, supply/demand game that the West touts, and people are complaining. You know what, it's the have-nots that are unhappy. Talk to the long time owners of properties in those hot markets and I bet they're grinning ear to ear.

1 ( +2 / -1 )

And then, Trump will come and reclaim all of it back to US of A! Yeah!!

2 ( +2 / -0 )

A friend in the real estate industry here in Japan told me just last week that Chinese from China come in and buy mansions, land, whatever ... and pay cash on the barrelhead. They are welcome customers ...

1 ( +2 / -1 )

StrangerlandMAY. 17, 2016 - 10:07AM JSTI ask again, what specifically is the problem with millions of dollars of investment into the country, and job creation? Strangerland MAY. 17, 2016 - 03:38PM JST The comment I was replying to was not specifically about the US:

Which country are you talking about when you talk of investment into the country, and job creation?

2 ( +2 / -0 )

I can't believe the Chinese would invest in Vancouver and Toronto - two of the most over-hyped and boring cities on the planet.

2 ( +4 / -2 )

Property here in Shinjuku is also very hot, and prices have been rising the past 5 years. It is not just in the US. I hope an article appears that analyzes Chinese buying up Tokyo.

1 ( +1 / -0 )

Which country are you talking about when you talk of investment into the country, and job creation?

My comments on that were in reply to this comment.

Here is the problem. Investments in the U.S. provide another advantage: a pathway to a green card. Chinese investors have been particularly aggressive at using a federal visa program called EB-5 that allows overseas citizens to put half a million to $1 million into a project that will create at least 10 jobs. Investors can get a green card in about two years. So far this year, close to 90 percent of the EB-5 visas issued worldwide have gone to Chinese.

-1 ( +1 / -2 )

Again, a management problem. I'm still not seeing the problem in millions of investment, and job creation.

Well, there are the same problems that are associated with gentrification, although the purported solutions may be worse than the problem itself. There's also the problem of vacant properties. This has been a problem in Japan with foreign-owned properties in Niseko, for example. And there have been complaints that foreign owners don't follow local rules for trash disposal and snow removal, for instance. But overall, short of a bubble, real estate investment is usually a plus for the community

2 ( +2 / -0 )

Using up there USD?

1 ( +1 / -0 )

I don't think the Chinese understand the concept of economic bubble. If domestic land owners of Vancouver,etc. sees even a slight numbing in prices or starts selling to invest in other places that is the next high value property then the Chinese who invested are going to see their asset value decrease rapidly which will probably trigger a burst in the property bubble in which only the Chinese that invested will lose money.

1 ( +2 / -1 )

Now, when is China gonna allow this much foreign investments into real estate in China?

2 ( +2 / -0 )

I laugh at all the arguments, because no one here will make one bit of a difference in the rise of Chinese overseas investments.

Nothing we can do except bicker on JT, because this will keep happening with no regard for human life.

1 ( +1 / -0 )

Thinks the rich of China are looking for places to hide their money and themselves.

0 ( +1 / -1 )

Thinks the rich of China are looking for places to hide their money and themselves.

They are definitely looking for places to get their money out of China. I wouldn't say they are hiding it though, they are open about it. But they are hedging against a collapse of the Chinese economy.

1 ( +1 / -0 )

^ Many of them are children from Chinese officials and owners of some co-operations that make money from selling questionable products. Many pay in full and in cash. For the former one, if you based it on their salary, there is no way they could afford those estates, so it pretty much tells you where they get the money from.

1 ( +1 / -0 )

^ Many of them are children from Chinese officials and owners of some co-operations that make money from selling questionable products. Many pay in full and in cash. For the former one, if you based it on their salary, there is no way they could afford those estates, so it pretty much tells you where they get the money from.

Please quantify 'many'. China has more millionaires than any other country in the world now. It's not the commoners that are buying the houses overseas.

0 ( +2 / -2 )

Most of these investments are made by having excess cash. Yeah, some are also doing it so as to not put all of their eggs in one basket, but it's definitely excess cash. They don't even desire to live in these properties. Doesn't that tell you something? They're not seeking for "a better life", because they're already living it. They don't really care about whether the bubble will burst or not, although the local property developers would. And don't kid yourselves, if the property prices do drop if/when the bubble bursts, then even more will buy up these cheaper properties. It's just a money cycle thing. It's actually quite a common phenomenon, but historically with different nationalities. Now it's the Chinese, and I think that's where many feel is a problem. The free market is free until it's not, eh?

0 ( +1 / -1 )

What this story fails to mention is while in the short term it appears that the Chinese buyers are helping the local economies THEY ARE KILLING IT FOR LOCALS.

The Chinese buyers are driving up local prices so that people who were born in the area can no longer afford to live and/or buy and therefore must move out of the area. This in turn creates a problem because anyone just above median income and below for the area can NOT afford to live there. So who will do their jobs when they move out.

It's not just the younger generations but the older ones too as they will get taxed out of the very homes they have already FULLY paid for because of the ridiculous property value increases and the assessed value which property taxes are charged upon. Remember, seniors are retired and live on a fixed income so if you suddenly double or triple their taxes, how are they going to be able to pay for that?

Also, the Chinese buyers that buy up all that property DO NOT help the local economy. The property is kept empty, they don't work locally so they don't pay any income taxes. They don't buy anything locally because they simply aren't there but they also buy up every property so the locals can't. It's the same as a swarm of locusts descending upon a lush green valley and eating everything up in site then leaving as soon as they arrived. HOW DOES THAT HELP THE LOCAL ECONOMY?!?

1 ( +1 / -0 )

"They are definitely looking for places to get their money out of China. I wouldn't say they are hiding it though, they are open about it."

Chinese citizens are only allowed to take a maximum 50,000 dollars out the country a year. Where do they come up with millions (often in cash) for a person home if they are being so "open" about it?

2 ( +2 / -0 )

KnowBetter MAY. 18, 2016 - 03:03AM JST The Chinese buyers are driving up local prices so that people who were born in the area can no longer afford to live and/or buy and therefore must move out of the area. This in turn creates a problem because anyone just above median income and below for the area can NOT afford to live there. So who will do their jobs when they move out.

Blame the local investors. Chinese investors maybe make up fraction of the total sales compare to local and regional investors. Majority of the property that is being bought is from the individual or investors with deep pocket with good credit and they are buying multiple residential and commercial properties as a investment. Interest rate is still low. They are looking at 5-10 years ahead. Many want to diversify their investment and there is substantial tax benefits from buying additional properties that will be used as rental properties.

1 ( +1 / -0 )

Chinese citizens are only allowed to take a maximum 50,000 dollars out the country a year. Where do they come up with millions (often in cash) for a person home if they are being so "open" about it?

Interesting, I didn't know that. I guess they aren't being that open about it.

0 ( +1 / -1 )

sfjp330 - Blame the local investors. Chinese investors maybe make up fraction of the total sales compare to local and regional investors. Majority of the property that is being bought is from the individual or investors with deep pocket with good credit and they are buying multiple residential and commercial properties as a investment.

Exactly the point in NZ. People have long blamed the Chinese for this but they don't like it pointed out that Americans and British are bigger buyers of property in NZ, and even then the amount of foreign buyers each year is far surpassed by local buyers. Pure xenophobia. Just to be clear, this isn't having a go at Americans or British, but having a go at the myth that Chinese buyers are the largest group and foreign purchases need to be stopped. Need to reign in on the locals who are amassing large portfolios, ripping people off in rent, and then using an easy scapegoat.

1 ( +1 / -0 )

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