Don’t Follow the Chinese Into This Deal
Jocelynn Smith
A second home — maybe tucked up in some snow-capped mountains or along a stretch of pristine white beach or overlooking rolling hills laced with a vineyard — often offers an escape from the day-to-day grind.
But for some new home buyers in the U.S., that second home offers an excellent way to protect their assets.
The Chinese have surpassed the Canadians for the first time,
becoming the No. 1 foreign buyers of American single-family homes and condos from March 2014 through March 2015. Spending more than $28 billion, the Chinese accounted for 16% of foreign U.S. real estate transactions, followed by the Canadians, who had held the top spot since 2008.
Not surprisingly, locations seeing the highest demand among Chinese buyers were Los Angeles, Houston, New York City, Orlando and San Francisco — all cities that continue to see solid home valuation growth.
But the rush among the Chinese into American homes isn’t a desperate attempt to capture the American Dream.
This land grab is about protecting their wealth. Real estate continues to be one of the best ways to protect your wealth against the threat of confiscation. Land is often not reportable and can be exceedingly difficult for a government to grab.
Many wealthy Chinese are rushing to move a portion of their assets overseas due to rising economic and political turmoil in the country.
I agree that real estate can be a wonderful way to protect your wealth, but I’m not so sure that buying real estate in the U.S. would be my first choice considering the government’s looming debt problem, growing unrest among its citizens, and a lackluster recovery that has left too many people unemployed or underemployed.
In fact, there are several places around the globe — such as Uruguay — that offer solid real estate markets in addition to being offshore financial centers with a strong respect for financial and personal privacy. Real estate is a great way to protect your wealth, but it’simportant to do your research first. You don’t want to trade one problem for another.
Regards,
Jocelynn Smith,
Sr. Managing Editor, Sovereign Investor Daily