Thank you to Martin
Armstrong's "Chinese on US Real Estate Spending Spree."
The Chinese are keen on investing in tangible assets,
namely real estate. Canada implemented
restrictions on foreign buyers after accusing them
of the real estate shortage and sky-high prices. Chinese buyers are now
targeting the American housing market. In fact, Chinese buyers outnumbered
buyers from any other foreign country and spent over $6 billion on US real
estate from April 2021 to March 2022. Canadians came in second for foreign home
buyers, spending $5.5 billion in the same period.
The National Association
of Realtors also noted that Chinese buyers tend to
purchase more expensive properties, averaging over $1 million at a time when
home prices were averaging under $400,000 (prices have risen since then).
Around 31% of Chinese buyers selected properties in California and tend to
choose wealthier areas for investments.
This is simply a means to park cash. Around 44% of foreign
buyers purchased homes in all-cash deals. Non-resident foreign buyers were 60%
likely to pay in cash compared to 30% of resident foreign buyers. Yes, this
does mean that home prices will rise as foreign buyers can outbid most domestic
buyers. This is good news for sellers who may have found themselves with no bid
but disastrous for the average citizen who is struggling to find permanent
shelter while paying for high rental properties that further remove them from
the dream of homeownership.
One thing to consider is geopolitical relations. Look at how
the US and others treated Russian “oligarchs” this
past year by seizing all their assets under the pretense of conspiracy. No
actual crime needed to be committed for bank accounts and assets to be
forfeited. Tensions are rising with China, namely over Taiwan, and it is not
unreasonable to think that the US could pull the same move on another nation.
The Chinese government is selling off US debt and slowly putting distance
between itself and the current top economy. Private investors may follow suit
if geopolitical tensions continue to rise.
