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So I found this flyer on the ground outside my office tower a couple days ago...

...and it left me, not unexpectedly, with a vague sense of sadness, shame, and even a little anger.

Throughout the financial crisis, foreign buyers -- Canadian, Middle Eastern and Chinese among others -- have been coming on trips to the US to buy real estate.  And that number is increasing:

According to a report released Wednesday by the National Association of Realtors, foreign clients spent about $41 billion in U.S. housing in the 12 months ended in March 2011. Individuals with visas to stay for more than 6 months purchased an additional $41 billion. Taken together, that’s about 8% of the total U.S. housing market.

In particular, the number of Chinese investors in US property has been on a big upswing:

According to a survey by the National Association of Realtors, Chinese buyers accounted for 9% of foreign home purchases in the 12 months ended in March of both 2010 and 2011. That's up from 5% in 2009.

But something has shifted of late.  More foreign buyers are now becoming owners of distressed properties, as the above flyer reflects.  These are bank repossessed properties being sold in batches, sight unseen to Chinese buyers.  These aren't properties the buyer is going to live in, as note the investment return statistics and that all of the properties are 'guaranteed tenanted', whatever that means.

What is interesting is that more international buyers are going downmarket. The NAR says in the latest year 45% of the international sales were under $200,000. That share is up from 28% in 2007.

In fact, there are now whole communities in the United States whose current real estate market is relying on Chinese foreign buyers:

Take Cupertino, Calif., for example. Sales of existing single-family homes in Cupertino rose 21% in the first quarter from a year earlier, largely due to an influx of Chinese shoppers who are making huge cash purchases.

Home ownership has long been regarded as part of the American dream, and certainly many Chinese people are also seeking opportunities to immigrate (or at least have the possibility of an 'escape' plan should things go awry politically and/or economically in China) or to provide education options for their children.  But when I see flyers like these, with patriotic stars and stripes being used to sell what is left of someone else's American dream at a pittance to someone else who decides to buy five of them at a go, I'm a little sick to my stomach.  

I remember as an exchange student long ago in the late 80's a discussion I had with one of my Chinese friends about adoption.  She thought it was terrible that American couples were adopting Chinese babies, despite the fact that the kids were unwanted, abandoned, and would doubtless have much better lives ahead of them.  I couldn't quite get my head around why.  "Because we should be able to take care of our own," she said, "we shouldn't have to rely on parents in other countries to do it for us."

I think I understand a bit more now about what she meant.

Originally posted to Global Expats on Fri Jul 08, 2011 at 02:09 AM PDT.

Also republished by Progressive Hippie.

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Comment Preferences

  •  Sorry for the messed up TJ (3+ / 0-)
    Recommended by:
    Silent Lurker, PeterHug, ScienceMom

    This is my first diary on the new system, so, still learning the ropes!

  •  "Guaranteed Tenants by US Federal Reserve" (4+ / 0-)

    for 4 years!!!! LOL!

    A few days ago a realtor was on our local Bay Area mandarin radio station. She told the local buyers to stay away during the busy chinese national holidays to avoid the crush of chinese cash buyers.

    To be honest though - I am rather grateful that somebody is buying our distressed real estate. I see no downside to this at all.

    •  They're also unlikely to be happy (2+ / 0-)
      Recommended by:
      HKHeadhunter, dance you monster

      Absentee landlords, half a world away? That doesn't sound like a recipe for success to me.

    •  Yes, I'm kind of ambivalent (1+ / 0-)
      Recommended by:
      Mnemosyne

      I think it is really good that someone sees value in US assets, because otherwise property values would continue to decline, and the downward spiral goes on.  But I guess I wish there fewer 'landlord/investor' type transactions and more families moving in and communities being built and enhanced.  I don't really see that happening.

    •  What happens when they... (1+ / 0-)
      Recommended by:
      HKHeadhunter

      ...encounter a better investment?  When the dollar tanks and reduces their "guaranteed" returns, while some other ad for gold or oil-tanker shares or rare earths promises better net outcomes?  These are investors, with no ties to these properties other than how much they can squeeze from tenants on the minimum of upkeep expense.  No downside?  Their tenants will be screwed; the communities will see declining properties and the constant threat of mass exodus of the landlords; and the only ones to benefit will be those who want to see property values propped up for the nearest quarter only.

      •  The Chinese are buying elsewhere too (1+ / 0-)
        Recommended by:
        dance you monster

        Property advertisements abound for real estate in Australia, Canada and the UK in newspapers and magazines here.  But not foreclosed properties, usually more upscale stuff.  So I tend to agree that these distressed sales don't necessarily mean the neighborhoods are going to improve.

  •  I don't understand (2+ / 0-)
    Recommended by:
    HKHeadhunter, Deep Texan

    aren't the same prices available to Americans, if they so opt to buy these properties?

    If not, I can see that there might be a problem.  But if so, I don't get what the fuss is about*

    *OK, I get that this allows the likes of Celine Dion into the country, but I suppose one has to take the bad with the good . . .. . .

    •  There isn't anything specifically wrong (2+ / 0-)
      Recommended by:
      Roadbed Guy, Mnemosyne

      with any foreign buyer coming in and buying property up the wazzoo anywhere in the US.  It's a free market, it's one of the ways we attract investment as an economy, these folks have to pay property tax, etc. etc.  And I assume the prices are the same as they would be for Americans, with probably some added fees on top for using an offshore agent.

      I acknowledge that some of my ambivalence may in fact be rooted in nationalism and all of the things one is taught to believe (and may in fact believe) about what makes the USA a great country.  That's one of the reasons why I wrote about this and tried to compare how I was feeling to my Chinese friend who felt exactly the same way -- insecure, ashamed, defensive.  Living here where the economy is still pretty white hot, one becomes used to one's Asian colleagues making frequent jokes about the US dollar, about our tax structures, about our inability to regulate ourselves, even about our democracy.  Finding this flyer was sort of the catalyst for me to try and examine the situation and my feelings about it a bit more closely.

  •  Where does one find 5 houses (0+ / 0-)

    for $200,000?

    Republican tears sustain me.

    by orson on Fri Jul 08, 2011 at 07:48:18 AM PDT

    •  I'm currently in Montpelier, Idaho (1+ / 0-)
      Recommended by:
      mythatsme

      There are many houses here under 40K.  The former State Farm Insurance office just sold for 20K.   You could buy a significant stretch of what used to be a vibrant Main St. for 200K.  

      This town was formerly the center of a beet sugar processing industry.  That's gone now.  So is the rail depot, bowling alley, movie theater, two of three grocer's and every restaurant except a Subway and Arctic Circle hamburger joint.  The only store left on main street is a struggling Radio Shack and King's Variety and they will soon fall under the WalMart axe (WalMart is 72 miles away and everybody here shops there.)

      Only employer left is Halliburton, which services some nearby gas fields. But most of those workers live in RVs or trailers closer to work hence the depressed housing prices.  

      Perhaps the Chinese would be interested in beet sugar?

      An investment in knowledge pays the best interest. -Benjamin Franklin

      by martinjedlicka on Fri Jul 08, 2011 at 08:25:08 AM PDT

      [ Parent ]

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