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Foreign investors are the real issue. It's apparent that some are even laundering their money by purchasing US real estate. Just because the big players are doi

by dclaw 5y ago

Foreign investors are the real issue. It's apparent that some are even laundering their money by purchasing US real estate. Just because the big players are doing so with commercial real estate doesn't mean smaller players aren't doing it with housing. Many houses owned by foreign investors tend to sit vacant full time. There's even lawyers who specialize in the stuff, telling people to setup businesses and have the house owned by the business to reduce their tax rate. https://www.icij.org/investigations/fincen-files/a-kleptocrats-dream-us-real-estate-a-safe-haven-for-billions-in-dirty-money-report-says/ https://www.icij.org/investigations/fincen-files/a-kleptocra... https://calmatters.org/housing/2018/03/data-dig-are-foreign-investors-driving-up-real-estate-in-your-california-neighborhood/ https://calmatters.org/housing/2018/03/data-dig-are-foreign-... https://www.avvo.com/legal-guides/ugc/a-guide-for-foreign-investors-looking-to-acquire-california-real-estate https://www.avvo.com/legal-guides/ugc/a-guide-for-foreign-in...

woah 5y ago
This is a baseless conspiracy theory, usually peddled by those who stand to gain from high housing prices. "Oh no, high housing prices aren't caused by the fact that we don't allow anything new to be built, it's those nefarious foreigners". It's easy to see how it doesn't add up. Why would some wealthy foreign investor want to buy a house and then lose a bunch of money by not renting it out?
- sk2020 5y ago
  Some people have money they need to get rid of. Taking a loss on the property is not as big of a problem as having money you can’t justify having possession of. How much of the market that is would be hard to guess. Zero is not likely, though.
- Supermancho 5y ago
  https://www.bloomberg.com/news/features/2021-08-16/taxing-the-rich-do-housing-prices-fall-when-empty-second-homes-are-taxed https://www.bloomberg.com/news/features/2021-08-16/taxing-th... - the wealthy can afford lots of houses. They buy them or even build them (midwest, lots of empty multi-million dollar homes are still appearing). I mean, there are multiple multi-billion dollar companies who haven't let go of their office spaces when there's no hope that people were going to return to work anytime soon. One of the many simple reasons, they can afford to burn the cash and it's a drop in the bucket. I don't think you are grasping what kind of wealth buys up houses. > It's easy to see how it doesn't add up. > Why would some wealthy foreign investor want to buy a house and then lose a bunch of money by not renting it out? In the late 2010s, the primary reason was as a protective measure/taxation avoidance. In China, the wealthy are always at a danger of being on the wrong side of the government and having your wealth confiscated. In Bellevue (the wealthy eastside of the Seattle area) had a burgeoning industry of exotic car dealerships, luxury jewelry and housing prices soaring as Chinese money loaded up on housing. When Xi (and the PRC at large) decided to crack down https://www.jonesday.com/en/insights/2020/02/chinas-new-foreign-investment-law https://www.jonesday.com/en/insights/2020/02/chinas-new-fore..., by 2019 most of the luxury businesses evaporated and houses were being liquidated (most still made money because of decent US housing inflation) because of the taxation of foreign assets and the penalties for not disclosing them. So that's done. There's always oil money from the middle east which has ended up in California. My family sold off 2 properties to families from Quatar and Iran, who casually paid for east house up front. These were their "California" homes. Banks have been buying up houses for awhile now. Yes, it pains me to bring up FOX News. https://foxbaltimore.com/news/nation-world/major-wall-street-investment-firms-go-on-a-home-buying-sprees-amid-housing-boom https://foxbaltimore.com/news/nation-world/major-wall-street... - they are likely to rent out the homes. American banks who are looking to maximize value for something they don't intend to even live in (or run to), don't mind renting. This is a maximized investment that makes sense to you. Those do happen. My wife and I just bought a house next door to one of the MANY display houses of Todd Griffin (Windows Plus). The yard is a wreck but the interior furnishings (kitchen, windows, shelving, etc) are very nice, barring the bare slab concrete floor. Nobody has ever lived there.
- maxk42 5y ago
  It's not baseless. China is full of a new class of wealthy people who can have their property or wealth confiscated by the state at any time. They also know that won't happen in foreign real estate and as a bonus it affords their children the opportunity to attend a prestigious foreign university. Many wealthy Chinese own foreign real estate in western countries as a hedge.
conradev 5y ago
US investors are also a real issue, even if they fill their property with tenants

by dclaw 5y ago

woah 5y ago

This is a baseless conspiracy theory, usually peddled by those who stand to gain from high housing prices. "Oh no, high housing prices aren't caused by the fact that we don't allow anything new to be built, it's those nefarious foreigners". It's easy to see how it doesn't add up. Why would some wealthy foreign investor want to buy a house and then lose a bunch of money by not renting it out?

sk2020 5y ago
Some people have money they need to get rid of. Taking a loss on the property is not as big of a problem as having money you can’t justify having possession of. How much of the market that is would be hard to guess. Zero is not likely, though.
Supermancho 5y ago
https://www.bloomberg.com/news/features/2021-08-16/taxing-the-rich-do-housing-prices-fall-when-empty-second-homes-are-taxed https://www.bloomberg.com/news/features/2021-08-16/taxing-th... - the wealthy can afford lots of houses. They buy them or even build them (midwest, lots of empty multi-million dollar homes are still appearing). I mean, there are multiple multi-billion dollar companies who haven't let go of their office spaces when there's no hope that people were going to return to work anytime soon. One of the many simple reasons, they can afford to burn the cash and it's a drop in the bucket. I don't think you are grasping what kind of wealth buys up houses. > It's easy to see how it doesn't add up. > Why would some wealthy foreign investor want to buy a house and then lose a bunch of money by not renting it out? In the late 2010s, the primary reason was as a protective measure/taxation avoidance. In China, the wealthy are always at a danger of being on the wrong side of the government and having your wealth confiscated. In Bellevue (the wealthy eastside of the Seattle area) had a burgeoning industry of exotic car dealerships, luxury jewelry and housing prices soaring as Chinese money loaded up on housing. When Xi (and the PRC at large) decided to crack down https://www.jonesday.com/en/insights/2020/02/chinas-new-foreign-investment-law https://www.jonesday.com/en/insights/2020/02/chinas-new-fore..., by 2019 most of the luxury businesses evaporated and houses were being liquidated (most still made money because of decent US housing inflation) because of the taxation of foreign assets and the penalties for not disclosing them. So that's done. There's always oil money from the middle east which has ended up in California. My family sold off 2 properties to families from Quatar and Iran, who casually paid for east house up front. These were their "California" homes. Banks have been buying up houses for awhile now. Yes, it pains me to bring up FOX News. https://foxbaltimore.com/news/nation-world/major-wall-street-investment-firms-go-on-a-home-buying-sprees-amid-housing-boom https://foxbaltimore.com/news/nation-world/major-wall-street... - they are likely to rent out the homes. American banks who are looking to maximize value for something they don't intend to even live in (or run to), don't mind renting. This is a maximized investment that makes sense to you. Those do happen. My wife and I just bought a house next door to one of the MANY display houses of Todd Griffin (Windows Plus). The yard is a wreck but the interior furnishings (kitchen, windows, shelving, etc) are very nice, barring the bare slab concrete floor. Nobody has ever lived there.
maxk42 5y ago
It's not baseless. China is full of a new class of wealthy people who can have their property or wealth confiscated by the state at any time. They also know that won't happen in foreign real estate and as a bonus it affords their children the opportunity to attend a prestigious foreign university. Many wealthy Chinese own foreign real estate in western countries as a hedge.

conradev 5y ago

US investors are also a real issue, even if they fill their property with tenants