Professional Soldiers ® - View Single Post - As war on corruption mounts, China’s rich flee to America

Flagg · 02-16-2014, 12:57

While the US cleared out the very nasty first wave of the real estate bubble that saw real estate prices rationalized and brought back to reality(until inflationary policies kicked in again)....Canada, Australia, and New Zealand have not seen their real estate markets implode like the US.

While Canada, Australia, and NZ have one significant difference in real estate markets(they all have personal guarantees on mortgages...no "jingle mail"), what they share in common with the US is the desire of affluent/wealthy Chinese to purchase "bolt holes".

This phenomenon has been going on since the lead up to the handover of Hong Kong in 1997.

It was probably Vancouver and Auckland that benefited the most from the Hong Kong exodus.....which planted the seed for the current(and far, far larger) exodus.

I suspect the massive size of the US real estate market is masking the Chinese influx harder to "see" outside of the local areas they tend to cluster in.

If Chinese grey money entering Vancouver, NZ, and Australia was cut off it would have a substantial impact on real estate markets.

China is a genuine and serious threat.

But like the former Soviet Union, it's tempered by the fact that the "wisdom of crowds" is seeing almost exclusively one way traffic movement of wealth and talent or at the very least the hedging of bets.

What's scary is that most of these real estate deals are 100% cash or approaching it.

What's the average equity for a US/Canadian/Aussie/Kiwi homeowner?

I wouldn't have a clue, but guessing 20/30/40/50%?

If a Chinese expat living in US/Canada/Aussie/NZ bought a house with cash, what would they be willing to lose if they needed fast liquidity for some reason?

I wouldn't have a clue, but guessing 20/30/40/50%?

You have 4 suitcases of cash and gold, how many are you willing to hand over for your family's seats in the lifeboat? 1/2/3?

Or:

You have 4 suitcases of cash and gold, how many are you willing to hand over for your family's ability to get themselves and a portion of their wealth out of Nazi, Germ....errrrr....the PRC?

This Chinese grey money is propping some things up........but Chinese grey money is likely to behave a LOT differently than local money when things get silly.

Good news, bad news.

02-16-2014, 12:57	#7
Flagg Area Commander Join Date: May 2011 Location: New Zealand Posts: 1,423	While the US cleared out the very nasty first wave of the real estate bubble that saw real estate prices rationalized and brought back to reality(until inflationary policies kicked in again)....Canada, Australia, and New Zealand have not seen their real estate markets implode like the US. While Canada, Australia, and NZ have one significant difference in real estate markets(they all have personal guarantees on mortgages...no "jingle mail"), what they share in common with the US is the desire of affluent/wealthy Chinese to purchase "bolt holes". This phenomenon has been going on since the lead up to the handover of Hong Kong in 1997. It was probably Vancouver and Auckland that benefited the most from the Hong Kong exodus.....which planted the seed for the current(and far, far larger) exodus. I suspect the massive size of the US real estate market is masking the Chinese influx harder to "see" outside of the local areas they tend to cluster in. If Chinese grey money entering Vancouver, NZ, and Australia was cut off it would have a substantial impact on real estate markets. China is a genuine and serious threat. But like the former Soviet Union, it's tempered by the fact that the "wisdom of crowds" is seeing almost exclusively one way traffic movement of wealth and talent or at the very least the hedging of bets. What's scary is that most of these real estate deals are 100% cash or approaching it. What's the average equity for a US/Canadian/Aussie/Kiwi homeowner? I wouldn't have a clue, but guessing 20/30/40/50%? If a Chinese expat living in US/Canada/Aussie/NZ bought a house with cash, what would they be willing to lose if they needed fast liquidity for some reason? I wouldn't have a clue, but guessing 20/30/40/50%? You have 4 suitcases of cash and gold, how many are you willing to hand over for your family's seats in the lifeboat? 1/2/3? Or: You have 4 suitcases of cash and gold, how many are you willing to hand over for your family's ability to get themselves and a portion of their wealth out of Nazi, Germ....errrrr....the PRC? This Chinese grey money is propping some things up........but Chinese grey money is likely to behave a LOT differently than local money when things get silly. Good news, bad news.
Flagg is offline