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A major developer’s failure in China has implications here at home, thanks to the nature of our global markets. Further, Evergrande’s looming crisis isn’t a singular example so much as a canary in the coal mine. As China’s economy slows, the underlying problem is a supply-and-demand imbalance, with demand falling short of expectations, as examined in the New York Times. In September 2021, Fitch Ratings downgraded Evergrande’s credit rating after the property developer missed key bond payments. A lower credit rating translates to a higher risk of default. For reference, Evergrande’s “CC” rating is one of the lowest speculative ratings Fitch assigns, just above D, which signifies an actual default.
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, while the customers are largely Chinese. And it doesn’t make it right for a bunch of outsiders to screw the locals regardless of country origin or destination.
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Florida accounted for 24% of all international real estate purchases in the US while California ranked second (11%). Chinese buyers accounted for 18% of the .2 billion that foreigners spent on homes during the 12 months ended March 31, according to the National Association of Realtors. While no one would say specifically why certain families were shying away from the media, some alluded to the fact that many of the buyers don't want any questions about where the cash is coming from.
It feels more like the Feudal system is the steady state and that societies with middle classes are out of balance, and will eventually revert back to steady state. I’d sell to any Chinese-American born into our culture and who loves the U.S. constitution and hates the Fed. Matter of fact I might even give them a discount.
Why the Chinese Are Snapping Up Real Estate in the U.S.
This CNN/Money report details how buyers from China are increasingly opting for U.S. real estate, often paying in cash and preferring California to most other states. I’d like to know who exactly thought it was a good idea to allow non-citizens to buy US property. Imagine if the US was buying up all the property in some other country, imagine the outrage! But it’s happening right under our noses and no one seems to care. 150 years ago it was the Irish-Americans, 100 years ago it was the Jews, 30 years ago the stories were about Japanese buyers buying up Hawaii and commercial RE in the US.
Overall credit extended to the private sector as a percentage of GDP rose to 134 percent in 2012 from 113 percent in 2005, according to World Bank data. Several factors help explain this surge in Chinese buyers’ interest in U.S. real estate. According to the IRS, the buyer or a member of the family must intend to live in the property for at least half of the number of days any person uses it over the first two 12-month periods after the date of transfer.
Chinese buying up housing in California
Foreign-based investors were twice as likely to make an all-cash purchase compared to resident foreign buyers. Florida was the state that attracted the heaviest volume of real estate purchases, according to figures provided by the NAR. It was the 14th consecutive year that foreign investors expressed the most interest in Sunshine State properties. Nowhere is the influx of Chinese homebuyers felt more strongly than in California, where more than half of the homes sold to foreign buyers went to Chinese nationals.
California is a top location for Chinese buyers, with a specific demand for San Francisco, and there's growing interest in Texas, Florida, and Georgia, Olick reports. We invite you to use our commenting platform to engage in insightful conversations about issues in our community. We might permanently block any user who abuses these conditions.
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Buying a home is an overwhelming undertaking no matter where you live, but as an overseas buyer in the United States, the process can be confusing if you don’t have the right guidance and work with the right experts. Therefore, we’ve included some crucial information and items to bear in mind in this article to assist you in buying your American property more smoothly. If the property is sold for more than $300,000 but less than $1,000,000 and the buyer plans to live there, the buyer will only have to pay 10% withholding rather than 15%.
The Chinese were the leading buyers for the seventh consecutive year, purchasing an estimated $13.4 billion worth of residential property. Yet that was a 56% decline from the previous 12 months and comparatively the biggest percentage drop of all foreign buyers. Chinese economic growth slowed to 6.3% in 2019 compared with 6.9% in 2017, when the previous buyer survey began.
They’re richer — and they have more access to credit. The Chinese have greater means to buy, thanks in part to the country’s economic growth and, in recent years, a boom in credit. Furthermore, any capital gain on the sale of a US property is taxable, and the non-resident foreigner must file a tax return . Hire a reputable property management company to look after your investment while you are away. California remained the top destination for the Chinese, with 34% of all Chinese purchases last year (April 20- March 21) taking place in the state.
Carrie has worked at firsttuesday for 12 years and is the lead contributor for all real estate market analysis and economic content. When she’s not covering the latest real estate story, Carrie enjoys volunteering at her local animal rescue. Put another way, China’s population has consistently decreased since 2015, and will continue to do so for years. This shrinking population does not match up with the country’s hefty investments, much like Japan’s economy following their 1980s bubble, according to economist Paul Krugman. And with great investment comes great debt, a lesson China’s real estate sector is quickly beginning to learn. Home sales fall and local panic sets in, Chinese citizens appear to be ramping up their foreign real-estate investments.
For Chinese buyers accustomed to rising real estate prices in their home country, properties in Palo Alto fit the conceptual mold of a sure-thing investment. Chovanec cautions that the recent surge in real estate investment is “a drop in the bucket” compared to a true loosening of capital controls. But given the central role the rich play in bidding up Chinese home prices, more activity in overseas real estate could cool the country’s red-hot housing markets.
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