Non-Americans are taking advantage of extremely low property prices.
So how do real estate demand and supply forces work in a battered economy? It’s simple – try getting the folks out of the country to bring your existing supply to lower levels. In other words, let them buy America’s bargain properties.
In 2007, Canadians took advantage of the weak U.S. dollar and found out it was a good year to purchase U.S. real estate whether for investment or their own dwelling. Here’s a clip from real estate expert Ozzie Jurock speaking about the heydays of buying:
Of course, this “phenomenon” has occurred again this year when prices are way too low that foreigners can afford multiple investments already. In fact, real-time real estate research team Altos Research released the latest 10-City Composite Price Index. It states, “For the month of September, listed property inventory declined in 23 of 26 markets and was up in 3 markets. Inventory declined by 1.7% across the 10 markets composing the Altos Composite index during September and 4.2% during the third quarter. Inventory grew by the largest amount in San Diego – up 1.1% – and fell by the largest amounts in San Jose and Atlanta with drops of 5.4% and 4.5% respectively.”
And if you think only the Canadians are interested, you must’ve been hiding in a cave. The East Asians are slowly consuming both commercial and residential real estate that they can purchase. An April 2009 report states, “… according to the Oriental Horizon program, 7.5 percent of U.S. residential property that was sold to foreign markets was purchased by customers in China, Taiwan or Hong Kong. We know they can afford it – as of 2008, the Boston consulting Group reported China was home to almost 300,000 millionaires – a 20% increase from 2007, and the world’s fifth largest number.”
Sounds too easy for them right?
But 2007’s real estate condition is a far cry from what we have now. It’s much harder time to take a subprime mortgage. David Levine, international tax manager with financial advisory firm Keats, Connelly and Associates, warns his countrymen, “Canadians can come in with cash and not have to worry about trying to raise a mortgage down here, then it’s really the perfect opportunity for them to buy right now.”
Levine sounds he can tame down the buying but we’re absolutely losing our property to foreigners. But who cares? Abu Dhabi now owns 75 percent of the Chrysler Building right?
What difference does it make?