Chinese real estate speculators rush to the United States, shouting "Everything is too cheap" (Photo)

Chinese real estate speculators rush to the United States, shouting "Everything is too cheap" (Photo) On September 15, 2011, at the Beijing Autumn Real Estate Exhibition and Trade Fair, Los Angeles, the United States...

On September 15, 2011, at the Beijing Autumn Real Estate Exhibition and Trade Fair, real estate booths in Los Angeles, San Francisco, New York, and Las Vegas.

Thirty years ago, the Japanese spent a lot of money in the United States; thirty years later, wealthy Chinese investors are rushing into the U.S. property market and all areas worth investing in waves. Supporting these Chinese buyers is the huge wealth generated by China's rapidly expanding asset bubble over the past decade.

Amy, a 35-year-old Indian, found that her American dream was being disrupted by a group of crazy Chinese.

Amy is a manager of an IT company in Silicon Valley. She and her husband want to buy an apartment in the small town of Palo Alto, California. She has placed orders 12 times, but almost every time she was bought by a Chinese family. These Chinese buyers paid in full cash and were at least $200,000 higher than the asking price of the homeowner.

You know, the housing prices in Palo Alto where they are located are expensive, with a house costing at least US$1.5 million. Known as one of the best areas in Silicon Valley, it is home to Stanford University and the headquarters of companies such as Facebook.

These Chinese buyers have some common labels: they are middle-aged and have a teenage child. Parents usually buy a house and then return to China, leaving their children to go to school in the United States.

Her Chinese friend explained to her that in this case, it is much easier for parents to make money in China than in the United States, and they do not have much sense of security about the money they earn. If they want to immigrate in the future, why not buy a house now?

Amy still finds it incredible: How can it be possible to save so much cash?

In fact, more and more generous Chinese buyers are flooding into the U.S. real estate market and other investment fields like wasps. Supporting these Chinese buyers is the huge wealth generated by China's rapidly expanding asset bubble over the past decade.

Data from the National Association of Realtors shows that since 2011, China has surpassed Mexico and the United Kingdom and has quickly become the second largest international buyer of U.S. real estate properties, second only to U.S. neighbor Canada, accounting for 11% of international sales and nearly $9 billion a year. That's twice the purchasing power of India, which has been neck-and-neck in the U.S. real estate market over the past few years.

Ronald Phillips, chairman of the National Association of Realtors, mentioned in an interview with the media that 70% of Chinese buyers prefer to live in Los Angeles, California, on the West Coast of the United States, followed by New York, New York, and Miami, Florida.

Data provided by the U.S. Department of Commerce show that in 2011, the Chinese sold a total of US$32 billion in securities products including U.S. stocks, bonds, etc. held through U.S. banks and securities brokers. At the same time, direct investment in industries in the United States increased by US$576 million.

Anecdotes about Chinese buyers spending large sums of money to sweep up properties in New York, Los Angeles, and even in Florida, a state that few Chinese buyers paid attention to in the past, are frequently reported in American newspapers. American media commented that this was reminiscent of the wave of Japanese home buying that swept the United States in the 1980s. "Later, with the collapse of Japan's economy, this wave also subsided."

"In the United States, you can buy a house with money"

50-year-old Guo Dong is an old Beijinger. He calls himself "the leader born under a red flag" and always thought that he would live in a 160-square-meter apartment in Beijing's Fourth Ring Road for the rest of his life. In 2002, Lao Guocai purchased this property at a price of 7,800 yuan per square meter.

Eight years later, he sold his stronghold in Beijing and became a Chinese landlord on the West Coast of the United States.

The new property is located in a small town called Woodland [latest news, price, apartment reviews], 20 kilometers away from Sacramento, the capital of California, and more than an hour's drive from San Francisco. The villa is more than 230 square meters, with gardens and yards in front and behind.

Lao Guo spent US$265,000 to acquire it. The house was built in 2004 and sold for $580,000 at the peak of the U.S. housing bubble in 2006. The last homeowner was an American elite under 40 years old. After the financial crisis in 2008, house prices plummeted. Like many Americans, the homeowner chose a "strategic default" because he felt that it was "not worth it" to repay the loan at the price when he bought the house. He did not want to continue to repay the loan, so the house was repossessed by the bank.

This type of house is called a "foreclosure house". Many Chinese buyers go there to hunt for bargains and pick up such "bargains." In the United States, Chinese buyers often pay full cash for a house, which makes the sellers happy. Lao Guo even lost two American buyers who quoted higher prices than him.

The cash comes from the sale of the house in China. In early 2010, he sold the house he had lived in for eight years for 35,000 yuan per square meter. At this time, the house price had quadrupled compared to when he bought it.

At that time, housing prices were at their highest. “There were almost no houses that could not be sold, and real estate companies were looking for housing everywhere.” On the day when we made an appointment to view the house, Lao Guo's family received more than a hundred people. The number of visitors in one day exceeded the total number of visitors in the previous seven years. Several groups of people in the intermediary company also cover each other, and some buyers even want to directly deposit millions of cash to complete the transaction immediately.

A house within the Fourth Ring Road in Beijing was sold for nearly 6 million yuan, which is about three times the price of Lao Guo's villa in "Rural America."

What made Lao Guo really determined to sell off the hot real estate in Beijing was because of his children. My 24-year-old son is studying at a university on the West Coast of the United States. The housing market is in a slump, but the rental market is increasingly bullish. Simply buy a property to prepare for your children's future immigration.

International buyers in the United States have different regional preferences: Canadians like to buy houses in Florida or Southern California, mostly for winter vacations; Mexicans prefer to buy properties in Texas because it is convenient to return home. The Chinese residential clusters are clustered near good school districts and large laboratories.

Taiwanese Luo Yihui is the senior vice president of Prudential Douglas Elliman Real Estate Company in the United States. She has been representing real estate in Long Island, New York for nearly 20 years. She told Southern Weekend reporters that most Chinese people who buy houses on Long Island do so "to make it easier for their children to study." Long Island is located east of New York and is a long and narrow island near the sea. The local tax rate is relatively high and it can be considered a "rich area" in New York. The transportation is also very convenient. The train can go directly to Manhattan in 20 minutes.

"In the United States, you can buy a house by paying money. If you don't have a green card, you can get an I-20 (admission permit) by registering at a private school in New York." Luo Yihui said, "Almost everyone comes here for the next generation."

On September 6, 2009, at the Beijing Autumn Housing Show, American real estate projects were being promoted.

“Everything is too cheap”

Luo Yihui’s Chinese customers suddenly increased in 2012, so much that one wonders if this is a “fleeing wave.”

These Chinese customers are not difficult to identify: they may be with their children, in groups of more than a dozen, inspecting the buildings for sale like a tour group. They are very diligent in looking at properties, "don't want to miss anything" and think "everything is too cheap".

They tend to give people the impression of being "rich and wealthy". When looking at the house, some people went directly to the yard to smoke, and after smoking the cigarette butts, they threw them on the ground. Sometimes when you walk in and see the room you don't like it, you turn around and leave, without caring about the feelings of the owner of the room.

"Everyone said they wanted to buy a 50 million house." Luo Yihui said that she had to select those "serious investors" before showing them the house.

Most of these people are young and middle-aged people in their thirties and forties. "Many people in their forties have assets of hundreds of millions." They are surprisingly young and wealthy. Taiwanese Luo Yihui sometimes wonders where the money of these mainland customers comes from. Their wealth has doubled in recent years due to investment in real estate, or because the companies they invested in have gone public, they have become rich at a young age.

"They said that it was easy to make money in the mainland in the past few years. If there were any good projects, after evaluation, a few people would pool some money and invest in it, making steel by local methods. But now it is getting more and more difficult." Luo said.

Luo attributed the influx of Chinese investors to the wide opening of U.S. visas. It took ten years from frequent visa rejections to the opening of a new second visa office in Beijing. According to data from the U.S. Embassy in China, nearly 1.4 million Chinese applied for visas to the United States in 2012, an increase of more than 40% from 2011.

In Changdao, there were almost no traces of Chinese investors ten years ago. Five or six years ago, there were Chinese buyers from Shanghai and Beijing. In the past two years, investors from second- and third-tier cities such as Xi'an, Guiyang, and Chengdu began to arrive in droves. They spend a lot of money and often spend a lot of money.

Long Island's real estate market has always been quite quiet. In the past, many houses worth tens of millions of dollars could not be sold for a long time. Occasionally, one or two buyers came to inspect but nothing happened. "There are really a lot of rich people here in Manhattan, but the real estate transactions are not that crazy, and local Americans generally don't spend that much money to buy a house." Luo Yihui said.

Now the takers of these houses are basically Chinese buyers. The buyers of the three tens of millions of houses recently sold on Long Island were all Chinese. Although they are expensive, they still feel "cheaper than those in China". For some of them, buying a house is "like buying a $500 piece of clothing."

A month and a half ago, a Chinese couple came to New York to view a house. My husband is almost fifty years old and is doing business in Beijing. The wife was less than forty years old and had a child with her. She threatened to "finish the house before returning to China." At this time, she did not have a green card or even a local bank account. She had only visited the United States once before. Two or three days later, the couple settled on a US$1.3 million villa in Long Island with a deposit of US$130,000. Within two days, all the money arrived.

"Sometimes you may find it unreasonable, but she really bought a house like this." Luo Yihui said.

At present, the exchange rate quota set by the state is US$50,000 per person per year. For example, Lao Guo didn't need much money to buy a house, so he asked a few friends to help him raise the amount. It is no longer difficult to transfer large amounts of money overseas. "It's as easy as swatting a fly. Five billion billion will come out slowly, and millions and tens of millions will come out in just a few turns. It will be launched in Hong Kong first, and it will not be an underground bank yet." A partner of a Chinese investment company in the United States told a Southern Weekend reporter.

Some banks with deep connections in Asia, such as HSBC and Citigroup, can provide loans to Chinese investors buying houses in the United States. They understand that more and more Chinese buyers are pouring into the United States, and similar rules of the game have also been transplanted from the mainland to the other side of the ocean. If you want to get a loan, yes, please first deposit at least 50% of the loan amount in the bank.

"I came here to hunt for bargains. In the past, all domestic investment fields were closed. Stocks and real estate have been dumped, loan sharking is dead, financial products are incomprehensible, antiques are basically fake, insects, summer insects, and tea are not reliable, and they will be sold as soon as they are speculated." The above-mentioned partner said, "The more important point is that no one can find a sense of security."