Also another 8.5% drop just today.
From the articles:
- Chinese are the largest foreign buyers of US housing.
- Chinese investors have shown the most interest in the San Francisco Bay Area (34 percent), followed by New York City (22 percent), Los Angeles (17 percent) and San Diego (13 percent) and growing interest in Miami.
Does anyone have an opinion on how this will effect your market if you're in one of these big cities or if it will effect the market at all?
Bad. I'd expect this to impact most gateway cities, particularly SF and NYC. Vancouver BC is a big magnet for Chinese money. It's already affecting real estate prices in Sydney (not sure if this link will work): http://www.theaustralian.com.au/business/property/...
Personally, i think no one really knows. There are 2 schools of thoughts from talking to my investors in Asia
1. US housing market falls because Chinese nationals sell houses to cover margin calls
2. US housing market improves as Chinese investors look for alternative safe havens.
My personal thoughts is that the net effect will be close to nil.
The other reason being that from what my friends who invest in the china stock market have told me, the small individual investors who got in late are the ones hardest hit, however this is not the demographics that has the means to buy houses in the USA.
The ones that do are the ones that got in early (not because of the stock market but because they had the means to move the market), and even with a 30% drop, is still looking at a portfolio of 120% growth over the last year (I'm just talking about numbers based off the shanghai index).
Of course the wrench in the works is the Chinese govt that has imposed all sorts of trading regulations to halt the fall of the market. what that is going to do to the situation, no one knows. I don't get the feeling the govt themselves knows.
The bigger question is whether the Chinese govt in the face of all this financial turmoil, is going to continue buying US bonds, i think this action will have great implications towards the housing market because it might have significant effect on the interests rate
Now all this is based on very very rough conversations with friends who trade the chinese market out of HK, so take it with a grain of salt.
I think the wealthy Chinese will seek to have more money in the US housing market considering the volatility of their stock market.
Our firm East-West Property Advisors (based in Hong Kong and Shanghai) did a survey a few weeks ago asking exactly that question. The result is that, because of the volatility of the stock market, 50% of the respondents are now considering buying overseas real estate.
Overall, different opinions prevail among Chinese citizens:
- High net worth Chinese are interested in buying US real estate no matter what the stock market is doing. They know that the stock market is considered to be a "gamble" and a rise/fall does not affect their overseas real estate decision making. Some might accelerate their purchases of real estate in overseas countries now.
- Some other Chinese are certainly looking to have more exposure to overseas investment options but not necessarily real estate. This is because property typically has a higher price point and many Chinese cannot afford that (yet), or they do not have the means to transfer the money out of the country (There is a 50,000 USD limit per person per year in transferring money out of the country)
- Lastly, the retail Chinese citizens (lower income) are planning to see how things will go with the stock market. Their money is tied up in the stock market so they are not able to do anything else anyway
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