7 ms·

I commonly hear the Chinese, Japanese or X nationality are buying up the housing in the United States with the emphasis of it being bad. Now, if we assume this

by winslow 12y ago

I commonly hear the Chinese, Japanese or X nationality are buying up the housing in the United States with the emphasis of it being bad. Now, if we assume this to be true, is this necessarily a bad thing? The United States has been importing many things from China for a long time now. Wouldn't it be good to welcome the wealthy Chinese or Japanese to spend some of that money back into the US economy? I'm sure the scale of Chinese/Japanense buying american homes barely makes a dent in the amount we spend abroad for cheap labor but just a thought I had. Can anyone shed some light on my thoughts?

Bahamut 12y ago
At least from what I understand about around Palo Alto (this may be incorrect), wealthy chinese buying up houses around the $1 million range in the area is part of what makes it difficult for Americans to compete for houses, especially since those wealthy chinese often do all cash transactions.
- jpollock 12y ago
  If that were true, Americans could simply vote for a local government that increased density allowing new units to be built. Foreigners can't vote and therefore ultimately do not control that part of the process.
  - chc 12y ago
    No, but they can just keep buying up a large share of the houses you build. You probably can keeping building to a point where foreign investors begin to lose interest — but Americans do not generally like very dense housing, so this sort of becomes throwing out the baby with the bathwater. You're potentially making housing more affordable by turning the neighborhood into a ghetto.
    - seanflyon 12y ago
      That sounds great to me. Build a dense section of town and soak up obscene amounts of foreign money. I don't think super expensive apartments are the most likely to become a ghetto.
  - mahyarm 12y ago
    You get a chicken-egg effect. The already resident majority homeowners like the rising property values, so they have a built in incentive to be NIMBYs and block development. They also chose the city for it's specific characteristics and do not want it to change into something else.
  - smacktoward 12y ago
    Because in America, the interests of the wealthy never get more attention from government than the interests of the community at large.
- cdibona 12y ago
  When we were recently shopping for a house in palo alto and los altos, we heard about and competed against Chinese nationals. I don't know how many of these all-cash offers were capital flight or how many were simply people looking to buy a house. Many of these stories came across as anti-immigration racism, but it very much wasn't limited to the ~1m market.
- prostoalex 12y ago
  All-cash just cuts down on transaction time. As long as you're willing to offer a higher price, there's a monetary value the seller will accept in exchange for typical 30-day closing time required by lenders.
berelig 12y ago
Opposing sentiment for this is usually seen in cities where the proportion of foreign real estate investment is significantly higher than the national level. For example, Toronto (or Vancouver) as a market has a much higher percentage of Asian owned real estate than Canada as a whole. This laser focus on one specific area for investment raises the value of real estate in that area to out of reach for most of its native residents. This is where the "emphasis on it [foreign investment] being bad" comes from. It's good for those who already own real estate, bad for those who want to.
- rjsw 12y ago
  This is a complaint in London too.
- tyoma 12y ago
  Whats missing is a sensible property tax scheme. Just tax the non-resident owners, who don't vote, at a much higher rate than city residents. Then use the extra money for great public infrastructure for people who do live in the city.
  - cgh 12y ago
    In the case of Vancouver, generally speaking they aren't non-resident or even non-citizens. Emigrating from China to get permanent residency and eventually citizenship for family members, along with a Western education and health care, goes along with buying one or more homes as part of what a friend who works in immigration calls "the full package". The net effect is a dramatic increase in inequality and skyrocketing house prices. A partial solution has already happened: the cancellation of the immigrant investor program.
  - prostoalex 12y ago
    > Just tax the non-resident owners, who don't vote, at a much higher rate than city residents. You don't even need to do a higher rate - they've likely bought their properties in nicer neighborhoods at higher prices, so the property tax revenue from the is higher anyways.
- 12y ago
danudey 12y ago
Property (specifically housing) is one of the most finite resources, and prices rise with demand. As the demand in Vancouver grows, the prices rise, and they continue to rise as high as the market will bear. Unfortunately, when the market consists of Vancouverites making the average wage here, and also wealthy Chinese businesspeople with hundreds of millions to spend, that directly affects the market. There is currently a condo development called Vancouver House being built in the densely-packed (for Canada) downtown core (which is also a peninsula, limiting growth and densification), which is being marketed specifically to the rich – so much so that when it was time to start shopping the properties around to buyers, the developers went straight to their target market: rich investors overseas, e.g. in Singapore and elsewhere. Even if you were an equally rich investor in Vancouver, they weren't offered here. Vancouver House is, of course, absurd luxury, the kind that only the rich can afford to own (and maintain), and it makes sense; turn that plot of land into housing that the locals can (and are willing to) afford, and you're looking at selling for up to a million per unit. Gear the entire property towards the world's wealthy elite, and you can build units five times the size that will go for twenty times the price or more - and guarantee a higher class of owner, who will treat their property with respect (or, more likely, leave it empty for now). Welcoming the absurdly wealthy into the economy without any checks or balances results in a rising cost of living without necessarily seeing a rise in the standard of living or in average wages. Property managers start doing renovictions (mass-evictions, allowed under local law if done for the purposes of renovating the building) so that they can upscale their clientele and double their prices. High-end shops crowd out the cheaper ones (Pacific Centre, the Vancouver mall with the highest revenue per square foot in Canada, started evicting the 'normal' stores like EB Games/Gamestop, as well as several shoe and clothing stores, in favour of high-end brands such as Victoria's Secret and Sephora). Pushing people out of the downtown core will raise the value of the surrounding land, spurring further development. Prices there will rise, forcing those people further out, in a ripple effect. The further out you force the average Vancouverite, the more transit problems you have (as you're still dealing with the same number of transit users, but you have to provide better service in the suddenly-denser neighbourhoods as well as others), and the more traffic issues you have as more people need to drive further to get to work (which in turn causes problems for transit, etc.). So, to answer your general question, yes, it can cause a significant problem if property developers devote all their energy to making more and more ridiculous luxury for the sole purposes of selling it to foreign investors who will leave them empty for years, while Vancouver already has rapidly rising housing prices that Vancouverites can barely afford, and when there's already a huge affordable housing crisis contributing to the city's homelessness.
stock_toaster 12y ago
Are they actually moving there though, or just speculatively investing in real-estate, and/or using it as a means to "off-shore" their wealth?

by winslow 12y ago

Bahamut 12y ago

At least from what I understand about around Palo Alto (this may be incorrect), wealthy chinese buying up houses around the $1 million range in the area is part of what makes it difficult for Americans to compete for houses, especially since those wealthy chinese often do all cash transactions.

jpollock 12y ago
If that were true, Americans could simply vote for a local government that increased density allowing new units to be built. Foreigners can't vote and therefore ultimately do not control that part of the process.
- chc 12y ago
  No, but they can just keep buying up a large share of the houses you build. You probably can keeping building to a point where foreign investors begin to lose interest — but Americans do not generally like very dense housing, so this sort of becomes throwing out the baby with the bathwater. You're potentially making housing more affordable by turning the neighborhood into a ghetto.
  - seanflyon 12y ago
    That sounds great to me. Build a dense section of town and soak up obscene amounts of foreign money. I don't think super expensive apartments are the most likely to become a ghetto.
- mahyarm 12y ago
  You get a chicken-egg effect. The already resident majority homeowners like the rising property values, so they have a built in incentive to be NIMBYs and block development. They also chose the city for it's specific characteristics and do not want it to change into something else.
- smacktoward 12y ago
  Because in America, the interests of the wealthy never get more attention from government than the interests of the community at large.
cdibona 12y ago
When we were recently shopping for a house in palo alto and los altos, we heard about and competed against Chinese nationals. I don't know how many of these all-cash offers were capital flight or how many were simply people looking to buy a house. Many of these stories came across as anti-immigration racism, but it very much wasn't limited to the ~1m market.
prostoalex 12y ago
All-cash just cuts down on transaction time. As long as you're willing to offer a higher price, there's a monetary value the seller will accept in exchange for typical 30-day closing time required by lenders.

berelig 12y ago

Opposing sentiment for this is usually seen in cities where the proportion of foreign real estate investment is significantly higher than the national level. For example, Toronto (or Vancouver) as a market has a much higher percentage of Asian owned real estate than Canada as a whole. This laser focus on one specific area for investment raises the value of real estate in that area to out of reach for most of its native residents. This is where the "emphasis on it [foreign investment] being bad" comes from. It's good for those who already own real estate, bad for those who want to.

rjsw 12y ago
This is a complaint in London too.
tyoma 12y ago
Whats missing is a sensible property tax scheme. Just tax the non-resident owners, who don't vote, at a much higher rate than city residents. Then use the extra money for great public infrastructure for people who do live in the city.
- cgh 12y ago
  In the case of Vancouver, generally speaking they aren't non-resident or even non-citizens. Emigrating from China to get permanent residency and eventually citizenship for family members, along with a Western education and health care, goes along with buying one or more homes as part of what a friend who works in immigration calls "the full package". The net effect is a dramatic increase in inequality and skyrocketing house prices. A partial solution has already happened: the cancellation of the immigrant investor program.
- prostoalex 12y ago
  > Just tax the non-resident owners, who don't vote, at a much higher rate than city residents. You don't even need to do a higher rate - they've likely bought their properties in nicer neighborhoods at higher prices, so the property tax revenue from the is higher anyways.
12y ago

danudey 12y ago

Property (specifically housing) is one of the most finite resources, and prices rise with demand. As the demand in Vancouver grows, the prices rise, and they continue to rise as high as the market will bear. Unfortunately, when the market consists of Vancouverites making the average wage here, and also wealthy Chinese businesspeople with hundreds of millions to spend, that directly affects the market. There is currently a condo development called Vancouver House being built in the densely-packed (for Canada) downtown core (which is also a peninsula, limiting growth and densification), which is being marketed specifically to the rich – so much so that when it was time to start shopping the properties around to buyers, the developers went straight to their target market: rich investors overseas, e.g. in Singapore and elsewhere. Even if you were an equally rich investor in Vancouver, they weren't offered here. Vancouver House is, of course, absurd luxury, the kind that only the rich can afford to own (and maintain), and it makes sense; turn that plot of land into housing that the locals can (and are willing to) afford, and you're looking at selling for up to a million per unit. Gear the entire property towards the world's wealthy elite, and you can build units five times the size that will go for twenty times the price or more - and guarantee a higher class of owner, who will treat their property with respect (or, more likely, leave it empty for now). Welcoming the absurdly wealthy into the economy without any checks or balances results in a rising cost of living without necessarily seeing a rise in the standard of living or in average wages. Property managers start doing renovictions (mass-evictions, allowed under local law if done for the purposes of renovating the building) so that they can upscale their clientele and double their prices. High-end shops crowd out the cheaper ones (Pacific Centre, the Vancouver mall with the highest revenue per square foot in Canada, started evicting the 'normal' stores like EB Games/Gamestop, as well as several shoe and clothing stores, in favour of high-end brands such as Victoria's Secret and Sephora). Pushing people out of the downtown core will raise the value of the surrounding land, spurring further development. Prices there will rise, forcing those people further out, in a ripple effect. The further out you force the average Vancouverite, the more transit problems you have (as you're still dealing with the same number of transit users, but you have to provide better service in the suddenly-denser neighbourhoods as well as others), and the more traffic issues you have as more people need to drive further to get to work (which in turn causes problems for transit, etc.). So, to answer your general question, yes, it can cause a significant problem if property developers devote all their energy to making more and more ridiculous luxury for the sole purposes of selling it to foreign investors who will leave them empty for years, while Vancouver already has rapidly rising housing prices that Vancouverites can barely afford, and when there's already a huge affordable housing crisis contributing to the city's homelessness.

stock_toaster 12y ago

Are they actually moving there though, or just speculatively investing in real-estate, and/or using it as a means to "off-shore" their wealth?