Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Wealthy Chinese Are Desperate to Buy Your Vacation Home

Housing-Market / US Housing Sep 28, 2010 - 07:52 AM GMT

By: DailyWealth

Housing-Market

Tom Dyson writes: My friend is visiting from Shanghai. Last night, he told us some incredible stories about the crazy rise in real estate prices in China...

Take his parents, for example. They live in Qingdao, a fast-growing city on the east coast between Shanghai and Beijing. His parents bought a house on the beach seven years ago. It's gone up six times in value since they bought it and is now worth over $1 million.


My friend works at a Shanghai mutual fund company. He says his coworkers have all made fortunes buying property in Shanghai. One colleague bought an apartment "way out" in the suburbs where there's no subway. Its value has almost tripled in 18 months.

I asked him why people are so desperate to own property. He says China is gripped by a genuine inflation scare right now. People don't want to hold cash. The rich convert their money into foreign currency and move it offshore. Everyone else buys property.

In April, the Chinese government introduced new laws to prevent property speculation. There's a new sales tax on property held for less than five years, for example. A minimum 40% down payment is another. The idea was to put the brakes on the property market and kill the inflation fears. At the time, people thought these rules would cause buying to dry up and the property market would crash.

"They didn't even slow the market down," said my friend. "My apartment has gained 30% since April."

Here's the thing: While the Chinese property market soars, the U.S. property market is stuck in a bog. Last week, the Commerce Department announced that house prices had fallen to new six-year lows in August. New home sales are at the lowest levels since the government began collecting data in 1963.

The Chinese have noticed how cheap American property is... and instead of plowing their money into expensive properties in China, they're eager to get their money into American real estate. Everyone is afraid the Chinese government will do something stupid to get a handle on inflation, like causing the real estate market to collapse. Cheap U.S. real estate is the perfect solution...

Take my friend's parents... They plan to sell their house in Qingdao and use the proceeds to buy two houses in Fort Lauderdale. They'll live in one house and generate retirement income by renting out the other house. This way, they'll have a great retirement in Florida. And the rental house will keep them busy and provide an income. Most importantly, they'll get their money out of China.

My friend says this trend is going to grow into massive proportions over the next few years. To capitalize on it, he plans to set up a consultancy business helping Chinese invest in South Florida. He'll show them properties, handle the taxes and paperwork, and help them find tenants if they need income. In return, he'll earn commissions and fees.

Florida has beautiful beaches, great golf courses, no state tax, and near-perfect weather. Above all, it's an easy way for foreigners to get capital out of their home countries. It's not just the Chinese who are eager to buy... Rich Venezuelans and Colombians love Miami. So do wealthy Europeans. Snow birds from Canada and the Midwest love Naples. The Brits love Orlando.

This safe-haven status puts a floor under Florida property prices. And the coming Chinese interest is just another reason for buying deeply discounted Florida property.

While I don't expect prices to rise for a few years, there's almost no downside risk to Florida property at current prices.

Consider taking a trip to Miami or Naples and touring a few beachfront houses. If you ever wanted to buy your dream retirement home... or start a new career as a landlord... you can't go wrong in Florida right now.

Good investing,

Tom

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2010 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Wags
28 Sep 10, 10:23
Interesting

One small oversight in this report is the incredibly stringent capital control that is enforce in China.

While it is true that people are desperate not to be caught with cash, most of that money will never migrate back to buy American housing. Not unless those capital control laws change. This is another big consideration for those eyeing the gold markets: the increasing sums of private Chinese cash only have a few avenues of use and everyone here knows the property sector is well overheated.


Shelby Moore
28 Sep 10, 19:17
Yuan peg

I am trying to understand the mechanisms that keep capital within China from escaping to greener pastures, thus causing bubbles in real estate and for-export factories.

1. China's central bank controls all foreign exchange of Yuan.

2. While citizens are free to travel abroad, most countries where they would find undervalued investment opportunities, will either not give visas to non-wealthy Chinese (e.g. USA and Europe), or do not allow foreign business and land ownership (e.g. Philippines, Thailand, India, etc). Vancouver and Hong Kong have so many Chinese immigrants and real estate bubbles because they encouraged Chinese immigration.

3. Although Chinese can buy gold domestically, the price over spot is excessive and there are probably restrictions or taxes to be paid if it is exported.

So when the western countries say they want the Yuan peg to end, they are lying because if they really wanted it, they could just encourage Chinese visitor visas for tourism and investment purposes (no need to give politically sensitive immigrant visas).

However, this presents an enormous business opportunity to those market makers who want to provide a way for Chinese exporters to get paid in local Yuan that wants to get exported. The foreign importers then provide the exported foreign exchange. This could be run on the internet. However, you could expect the world's govts to shutdown any such thing.


Shelby Moore
03 Oct 10, 02:20
west wants yuan peg

Important to cross-reference the discussion that started in comments above, to the extensive continuing discussion at another page that gets precisely into the Yuan peg and the suggestion that this article above made about Chinese preparing to buy real estate in Florida:

http://www.marketoracle.co.uk/Article23142.html#comment95152

You can highlight the above link with your mouse, then Copy + Paste to your browser Address line.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in