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Are you in a Chinese-dominant real estate market, or... have Mainland Chinese people gobbled up your homes in the last 2 years?
How's it doing in your area now?
In my area, there has been a big slowdown in home purchases by chinese. That's sorta good news for people who tried to buy homes in the last 2 years, but were always beaten out by chinese cash buyers.
What used to sell in less than 1 week, or at most 1 month, now won't sell at all.
One home listing I saw recently expired after 10 months on the market, asking for just over $1M.
This listing belonged to one of the top producers in my area, and that agent couldn't move it.
1.5 years ago, this same home would have sold at this price within 2 weeks.
During 2013-2014, there was a builder frenzy, with old homes being snapped up to build 4500-9000 sqft mcmansions. At one point, the chinese stupid-rich "tuhao" bought these up within days on market for megamillion$$$.
During the beginning of the building frenzy, new home prices started at upper-$400/sqft. Then in 2014, that quickly jumped to almost $600/sqft. Some places even more.
Builders were successful in building bigger and bigger homes for $600/sqft asking price, scoring huge profit margins. They were making $1M-2M profit per home!
Mcmansions sprung up left and right as builders realized their success.
2015 came around, right when the China stock market bubble began.
Why buy SoCal real estate when the China stock market gives you 100% profit within 6 months?
Stupidrich chinese noticeably stopped buying real estate here. Of course, they must have dumped their money into the stock market.
Builders took notice, and started selling (or trying to) the old homes they bought a couple years ago, unbuilt, undemolished.
$5M mcmansions were/are no longer selling.
I read a recent article that agents are seeing new home purchases fall apart because mainland chinese buyers had to cancel as a result of stock market losses. A handful of Tuhao who bought mcmansions last year have been having a tough time trying to sell (for a loss) recently, presumably to cover money they borrowed to play the stock market.
I spoke recently to a business advisor who has been living in China for the past 5 years, and he agrees that the Chinese have a ton of 'stupid money'. It's money that has fallen into their laps, not money they have truly earned by merit. and that goes hand in hand with their reckless investing. That's why you see them doing stupid sh!# like flipping property endlessly, always trying to find the next sucker. Same deal with the China stock market. Many tuhao jumped in too late and got caught with their pants down.
All aboard the gravy train............. Oh sh#%! There are no tracks ahead.
It's hard to predict China because their 1%er is still a whopping 13 million people! If only 1% of the top 1% bring their money here, that's still 130,000 people!! That's enough people to move the needle.
You could be seeing an initial shock, it could be followed by Chinese money being moved away from home and to our market.
Remember that our dot com bust was followed by a housing bubble. So it's not always true that a stock market crash will take down the real estate market. If anything, it could motivate people to take money from the market and invest in housing.
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The unfavorable yuan may slow things for a while if one is using Chinese currency to buy. The Chinese that bought US real estate over the last few years appear to have made a good investment.
Chinese investors have only been buying in a few cities. If they drop out its not going to affect too many locations.
Although, buyers from California sell down there and come up here and pay too much, raising our house prices. But I think that if they get less down there, they will still come up here and overpay.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I'd look for the opposite to happen. If the Chinese with money are going to abandon the stock market and their economy is suffering, they will invest more in our real estate instead.
For years the market has been explained as "fluctuations ".
Now it's switched over to "fluctuamericans".
Our government needs China to buy our debt and we have slowly over many years become more and more indebted to them for our well being.
It's hard to predict China because their 1%er is still a whopping 13 million people! If only 1% of the top 1% bring their money here, that's still 130,000 people!! That's enough people to move the needle.
You could be seeing an initial shock, it could be followed by Chinese money being moved away from home and to our market.
Remember that our dot com bust was followed by a housing bubble. So it's not always true that a stock market crash will take down the real estate market. If anything, it could motivate people to take money from the market and invest in housing.
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yes, as people get scared of the stock market, they may put money into the real estate market.
But that's assuming these Chinese came away from their market unscathed and are not afraid to reinvest.
Car sales have recently declined in china. What does that mean for overall consumption by Chinese?.....
Many of these chinese people never had long term wealth or discipline, so they're always doing reckless things, chasing the next quick profit. That's why they call them "tuhao".
But once they're burned, they seem to hide away like a turtle.
I highly doubt there will be a housing bubble fueled by chinese purchases.
This is a different animal from the housing bubble we had in the mid 2000s. That housing bubble was fueled by subprime loans, greed, and feelings of invincibility by consumers.
All I know is that homes in my local market have been having a very tough time selling since the beginning of 2015, while the broader market is in an upward trend despite (still) tight inventory, and the only thing that will move homes in my local market is a huge price reduction. As sellers come to accept this, deals can be had by buyers.
I'd look for the opposite to happen. If the Chinese with money are going to abandon the stock market and their economy is suffering, they will invest more in our real estate instead.
Hemlock is spot-on. Similar thing happened when the Chinese took possession of Hong Kong from the British years back. Uncertainty in the financial market spurred real estate spending. Look at what happened in Vancouver BC at that time.
yes, as people get scared of the stock market, they may put money into the real estate market.
But that's assuming these Chinese came away from their market unscathed and are not afraid to reinvest.
Car sales have recently declined in china. What does that mean for overall consumption by Chinese?.....
Many of these chinese people never had long term wealth or discipline, so they're always doing reckless things, chasing the next quick profit. That's why they call them "tuhao".
But once they're burned, they seem to hide away like a turtle.
I highly doubt there will be a housing bubble fueled by chinese purchases.
This is a different animal from the housing bubble we had in the mid 2000s. That housing bubble was fueled by subprime loans, greed, and feelings of invincibility by consumers.
All I know is that homes in my local market have been having a very tough time selling since the beginning of 2015, while the broader market is in an upward trend despite (still) tight inventory, and the only thing that will move homes in my local market is a huge price reduction. As sellers come to accept this, deals can be had by buyers.
How long this lasts, of course, no one knows.
Curious, where's your market? I know you're from LA but it is a big area.
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