Mega-wealthy foreign buyers getting deep into American real estate – shutting out American buyers, scooping up the top of the market and, laundering money.
The American real estate market is not the same since the Great Recession. Private equity firms buying up tons of houses. Mortgage rates low, but mortgages still hard to snag. And then there are the foreign home buyers. More than ever. From all over the world. Looking at the US and seeing a great place to own. To, in effect, stash money. And sometimes to launder it. When you hear “all-cash purchase,” that cash may well be from abroad. They’re buying $90 million condos in New York, and maybe something on your block. This hour On Point: foreign buyers, American real estate.
— Tom Ashbrook
Shima Baradaran, law professor at the University of Utah.
From Tom’s Reading List
New York: Stash Pad — “According to data compiled by the firm PropertyShark, since 2008, roughly 30 percent of condo sales in large-scale Manhattan developments have been to purchasers who either listed an overseas address or bought through an entity like a limited-liability corporation, a tactic rarely employed by local homebuyers but favored by foreign investors.”
The Nation: How New York Real Estate Became a Dumping Ground for the World’s Dirty Money — “Financial crime experts have a name for the process of creating mazes of bank accounts and offshore companies to move and hide money: layering. When the layers are laid down skillfully, it’s often impossible for authorities to detect flows of illicit cash. The United Nations Office on Drugs and Crime estimates that as little as one-fifth of 1 percent of money that’s laundered around the world is identified and intercepted.”
Forbes: Chinese To Spend Billions On American Real Estate — “The United States is the country of choice for China buyers. Canada and Australia come in next at No. 2 and No. 3 respectively. That rich Chinese individuals and savvy corporations are buying up real estate in world class cities is no surprise at this point.”