Did China Just Crush The US Housing Market?

Zero Hedge ^ | 7/10/14 | Tyler Durden

[Nachum]

A few days ago we finally closed the door on any argument who the marginal buyer in the US luxury housing segment was - the answer: Chinese oligarchs, scrambling to launder their "hot" domestic money abroad (as we predicted first two years ago) and now that Switzerland is no longer a safe offshore venue where one can park cash, they picked US luxury housing as the best money laundering alternative.

This means that far from indicating a recovery, as the recent surge in the high end of the US housing segment had long been touted, all the relentless move higher in ultraluxury properties prices was simply a recycling of China's hot money, which unlike in the US, never made its way into the Chinese stock market (explaining why the Shanghai Composite has barely budged in years) and merely ended up in US real estate. If anything, this is simply another confirmation of the epic capital misallocation, and the complete lack of "trickle down" resulting from failed global central banking policies.

[Star Traveler]

That’s good ... let those Chinese buy high and sell low ... LOL ...

[ottbmare]

$500,000 is not the luxury market.

[cicero2k]

We are so fortunate.

Any money that comes into the US from the outside is “free” money. It did not have to be raised from taxes, payroll, asset sale within the US which is more like (not quite) a zero sum game.

Outside money like this is adrenaline.

[Vince Ferrer]

All that Walmart money coming back. They will buy high, sell low, and the difference we will keep. And we get to keep the cheap plastic junk we bought at Walmart too.

[Lurker]

It is around here. 500K buys a very nice home. It ain’t Bill Gates luxury, but it’s 4 times the value of my home.

[logi_cal869]

No, but they ‘are’ more solid investments.

I live in a $200k house and it’s a complete POS (underwater, too).

[Mears]

“$500,000 is not the luxury market.”

—

I agree.

.

[rdcbn]

Some of the Chinese investment is simply funds parking, but a lot of the motivation behind the Chinese purchase of homes in the US is to give them a safe home to flee to when the Chinese economy implodes.

It’s a serious vote of confidence in America, strange as it seems

[seowulf]

They will buy high, sell low, and the difference we will keep.

Just like the Japanese buying golf courses in the 80's.

[Dave W]

Read the chart...that is the median cost....half higher and half lower - so there are many million dollar properties in that chart.

[Vince Ferrer]

Just like the Japanese buying golf courses in the 80's.

Exactly like that.

[Cringing Negativism Network]

Chinese money is increasing and flowing into America.

American money however isn’t chasing Chinese properties, because Chinese properties aren’t open to American buyers.

What is wrong with this picture?

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[cpdiii]

I remember in the early eighties before Mexico had a massive devaluation of their currency what happened when I sold my house in San Antonio.

I never meet the man that bought my house. I listed it with a realtor and it was sold in just a few days. The purchaser was a business man from Mexico with money. He knew a massive devaluation was coming. My realty agent said this man was purchasing many houses day after day. He was trying to protect his money in Mexico from a devaluation that he knew was coming.

Oddly enough I was in Cozumel when the devaluation happened. I normally paid in cash but because of the devaluation and a freeze on exchange from the banks I put it on my credit card. My hotel bill became half of what it would have been if I had paid in dollars.

[pepsionice]

I would agree on this assessment. Revenue parking is a big part of the story...with most wealthy Chinese now worried about some Chinese police arriving at their door over corruption issues or hidden wealth (which they all do now). They all have some plan B, where the family sneaks out of China, and has enough cash in the US to reestablish their lives.

As for the US selected as a place to park money or reestablish? Look around. With the exception of Canada, I can’t think of another western country where you’d be welcomed as easily (for cash bribes of course) and that the economy is fairly stable. We may not see that in our own country, but we might be blinded by current circumstances.

[rdcbn]

A lot of the same Chinese who are buying homes also coincidentally are visiting their homes here in the States when their children are born “unexpectedly” premature