[quote=exsdgal][quote=CA renter]
Some are foreign investors who think the dollar is safer than their own currency and/or want to move money out of their own country for various reasons. Others are investors/managers/funds who are managing pooled investments from a variety of people and/or institutions. There are a lot of mega-millionaires and billionaires out there on a global level. That money goes wherever it’s perceived to be the safest and where it’s likely to yield the best returns. Whether it’s true or not, many people seem to think that the United States — and the USD — will give them the best return for the lowest possible risk.
[/quote]
I don’t see it this way. Among all assets real estate is the most non-liquid asset. In a crunch one can not get out of it fast enough. For a foreign investor to purchase real estate in the US, especially single family homes (think that is what we are talking about) they need to have specific needs. Needs like the investor spends a significant amount of time in the US, or has an immediate family member who will. If the situation were reversed, would you spend your money in a foreign country buying residential property just because it is considered a safe investment?
As a foreign investor if my objective was to take dollar as a safe harbor, then I would consider large apartment buildings and hotel chains as better investment opportunities. Definitely not single family residences.
The other option for foreign investors seeking safe currencies are Treasury bills, or US based stocks. Just like a US based investor can diversify using a multitude of stocks and bonds depending on global economy trends.
[quote=CA renter]
I’ve mentioned a deep-pocketed investor who was looking for large blocks of REOs, but who was not well-connected here. That was all Chinese money, and they had ~$2 billion at their disposal. I’ve heard that there are Russians doing the same thing, especially on the east coast. And there are a fair number of investors from Latin America, too. Of course, we have our own wealthy folks who are desperately looking for a place to earn a yield, too.[/quote]
IMO there are better alternatives for these wealthy folks seeking yield to consider, than dealing with the hassles of managing residential properties.[/quote]
Not just residential properties, all types of real estate, including agricultural properties, commercial, industrial, multi-family housing, and SFHs.
Overall foreign purchases of US real estate:
“Global real estate investors are flocking to the U.S.
A new survey shows that while London was the number one city among foreign real estate investors, the rest of the top five cities were all in the U.S.: New York (#2), San Francisco (#3), Houston (#4), Los Angeles (#5).
The survey of members of the Association of Foreign Investors in Real Estate said the U.S. is the “stable and secure” country for real-estate investment “by a wide margin.” The U.S. is also the top market when it comes to capital appreciation and for future real-estate purchases.
Houston’s high ranking shows that investors are starting to look beyond New York and San Francisco for deals.
“Our members’ increasing interest in cities beyond the powerhouses of New York, Washington and San Francisco points to the recognition of additional investment opportunities for foreign investors,” said James E. Fetgatter, the association’s CEO.
(Read more: NYC running short on luxury condos)
While most of the association’s members are institutions, some are high-net worth families. The survey doesn’t track investments in single-family homes.
The number one category for investment in 2013 was industrial properties, followed by office, retail and multifamily homes. Last year, multifamily homes ranked first.
…The latest data from the National Association of Realtors, which was released last summer, showed that foreign buyers had scooped up $68.2 billion of single-family homes in the U.S. in the year ended March 2013. That’s about 7 percent of the total U.S. market. That was down slightly from the $82.5 billion invested during the same period of 2012, but up from 2011. The fastest growth in foreign buyers was from China and Canada.”
[And this is probably only accounting for the direct foreign transactions, as I don’t think this includes pooled funds that use a domestic partner. It’s understated, as noted in the other article. -CAR]
This year, for the first time, the Chinese surpassed Canadians as the top investors in American residential real estate. According to the National Association of Realtors, during the 12-month period that ended in March, investors from China (Mainland China, Taiwan and Hong Kong combined) invested $22 billion in the U.S. housing market. Canadians, the perennial leader in foreign investment, spent about $13.8 billion.”
“In fact, a wealthy buyer from China can look at even the most expensive California markets like San Marino and think, “I can get a lot of house there without spending a lot of money.”
Price is not the only attraction. In many countries – Russia, Brazil and, indeed, China – successful business people feel threatened by arbitrary government behavior and have an incentive to get their money out of the country. The U.S. housing market offers consistently enforced contracts and transparency. When you consider that many foreigners aspire to send their children to an American college, buying a house here becomes a no brainer. USC, UCLA and Stanford are filled with examples.”
“Today, only a small percentage of privately held agricultural land in the United States is held by foreign persons; however, statistical information released by the United States Department of Agriculture Farm Service Agency indicates that foreign ownership interests in U.S. agricultural land is on the rise. In the past, a weak U.S. dollar sparked foreign investors to make large land acquisitions in U.S. agricultural land. In fact, there is good reason to believe Chinese investment in the U.S. may shift in favor of agricultural holdings, especially as China’s sovereign wealth funds and state-controlled companies have begun focusing on acquisitions tied to natural resource companies in the mining, timber and energy sectors. Moreover, renewable energy companies – such as those in the wind sector – continue to be hot acquisition targets in light of tax incentives afforded by federal and state governments and United States regulatory and legislative policies favoring the growth of the U.S. renewable energy market.”
Foreign investors held an interest in 26.1 million acres of U.S. agricultural land (forest land and farm land) as of December 31, 2012. This is an increase of 422,967 acres from the December 31, 2011 report (Report 1A), and represents 2.0 percent of all privately held agricultural land in the United States. These and other findings are based on information submitted to the U.S. Department of Agriculture in compliance with the Agricultural
Foreign Investment Disclosure Act of 1978. Forest land accounted for 52 percent of all foreign held agricultural acreage, cropland for 19 percent, and pasture and other agricultural land for 26 percent. Foreign holdings of U.S. agricultural land were relatively steady from 2000 through 2006; between 2006 and 2007, there was a significant 3.6 million acre increase. Since 2008, there have been moderate increases each year ranging from approximately
400,000 to 1.3 million acres.”
“Norway has vaulted to the top ranks of foreign U.S. commercial real estate buyers as its $870 billion sovereign-wealth fund, the world’s largest, acquires buildings from New York to San Francisco.”
