Investing in America, as The American Dream Crumbles.

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As we see the mortgage and real estate industries go through tough times (with thousands of homes falling into foreclosure) we can only hope that any money made from this disaster will at least stay in this country. Many investors are pouring millions into buying these foreclosures, often at fifty cents on the dollar. One would like to think those billions in future profits will remain here in the U.S., but unfortunately that’s often not the case.

According to a new study by the National Association of Realtors, about one in five American real estate agents sold a second home in the year ending April 2007 to a foreign buyer (defined as someone who has legally entered the United States to buy a home). A quarter of the agents surveyed said their business with overseas buyers had increased over the past five years. The study also showed that international buyers are spending more freely on houses than Americans are. The median price they paid was $299,500, compared to $221,900 for native-born buyers.

Many homes in foreclosure have gotten the attention of foreign investors, and many cities have major surpluses of foreclosures to offer them. Detroit is one such city that appears to be in a real crises; roughly 4.9 percent of the households in the Detroit metro area were in some stage of foreclosure in 2007, which is 4.8 times the national average; according to the study released by mortgage research company RealtyTrac Inc.

Stockton, Calif., ranked second with about 4.8 percent of its households in some stage of foreclosure, while the Las Vegas metro area was third with a 4.2 percent rate. In all, 72,616 filings on 41,273 properties were reported in the Detroit metro area, which includes Livonia and Dearborn. The foreclosure rate represents a 68 percent jump from 2006.

In Stockton, 22,184 foreclosure filings were reported on 10,608 properties last year, up 271 percent from 2006, RealtyTrac said.. The Riverside-San Bernardino metro area east of Los Angeles was ranked fourth, with 102,506 filings on 51,739 homes, a rate of 3.8 percent. Sacramento was ranked fifth, with 3.1 percent of its households reporting late payments.

The other California metropolitan areas in the top 20 were Bakersfield, ranked seventh; Fresno, ranked 14th; and Oakland at 16th. The Las Vegas metro area, which also includes Paradise, Nev., reported a total of 59,983 foreclosure filings on 30,375 properties in 2007.

Ohio, which has also been racked by high unemployment, had four metro areas among the top 20, including Akron at 12th, Dayton at 15th and Toledo at 19th. The metro area comprising Cleveland, Lorain, Elyria and Mentor was ranked sixth, with some 2.9 percent of all households in some stage of foreclosure. Miami ranked eighth with a 2.7 percent rate, the highest among all metro areas in Florida. Fort Lauderdale was 10th and Orlando was 20th. The other areas in the top 20 were Denver-Aurora, Colo., at No. 9; Atlanta-Sandy Springs-Marietta, Ga., at No. 11; Memphis, Tenn., at No. 13; and Indianapolis at No. 18.

Buying up U.S. Companies

Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year.

During the first two weeks of this year, foreign businesses agreed to invest another $22.6 billion for stakes in American companies – more than half the value of all announced deals. If a recession now unfolds and the dollar drops further, the pace could accelerate.

So I would urge our U.S investors (small and large) to get out and take advantage of the incredible real estate and business opportunities currently available, before our overseas neighbors take full advantage of our misfortune, and send all those billions in profit home.

America is the greatest country in the world, and if we don’t have the courage to invest in it ourselves, then it will slowly be sold out from under us. Invest in America, and the American dream will stay alive.

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  1. I was amazed at just how much of it we were selling! In the 1980’s the Japanese bought massive real estate holdings in the U.S. and there was concerns then; but as it turned out, they lost their “you know whats”.

    Times were different then, and now our economy is weak, our dollar is weak, and we may be in trouble. Selling our greatest assets to overseas investors for quick-fix cash, is a mistake. Soon they will go after our struggling builders and buy them out.

  2. Foreigners investing in US real estate is not a new phenomenon. A couple of decades ago the Japanese were buying everything in sight because the Yen had risen very sharply against the dollar. Back then everything looked cheap to them. People were horrified when the Japanese bought the American icon of Rockefeller Center. Fast-forward a few years; the Japanese economy was in a shambles and the Yen had fallen precipitously vs. the dollar. These same Japanese investors liquidated their holdings for pennies on the dollar and left. In the end, the US economy was the winner having sold high and bought back at lower prices. We can only hope that history repeats itself in this instance since we have a very rocky road ahead.

  3. Investing in “business” is not the same as investment in real estate. History is not repeating, but being made. Stocks allow votes. Votes to change business practices as we know it. We are living in some very interesting times.

  4. I find the definition of foreign real estate investor interesting here – “as someone who has legally entered the United States to buy a home.” How does the National Association of Realtors know that these people aren’t interested in remaining in the country? Isn’t it possible that new immigrants with money would be “someone who has legally entered the United States” and bought a home – to live in?

  5. Morgan Nilsen

    Why is it a problem that your strugling economy is getting revitalized by foreign investors? If this dont happen, the housing market falls even further and a whole lot of people get in deeper financial trouble. Foreign money is a benefit to your society, not the other way around. Americans shouldnt confuse patriotism with ignorance. There are thousands of fine people who are foreign investors, and it would be nice to be received with some hospitality. Norway and USA have enjoyed a very long period as allies, and I have greeted every american ive met in Norway with my finest hospitallity. My wife is Australian, and Australia and USA have enjoyed a very long alliance too.

    How exactly is it a problem that we enter your market? We take our money, that we have earned in our own countries, we take our money out of our economies to put it into yours to give service to your population.

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