SEARCH BLOG: CHINA and TAXES
The following article appeared yesterday in China's People's Daily Online. The recent decline in U.S. real estate prices has created a market for realtors... Chinese interested in owning a piece of the American Pie.
There is just one aspect of real estate ownership that seems to surprise the Chinese. When you get to the end of the article [which only appears long because of the pictures], you may find their surprise and concern... a bit surprising... and that should be concerning.
I think those U.S. realtors may have understated the tax aspect somewhat.
15:22, April 13, 2009
US housing exhibition aims at Chinese market
In the past three days, 76 US real estate developers and real estate brokerage companies brought attractively-priced real estate properties to the first “US-China Real Estate Summit International Real Estate Exhibition Trade Fair” at the Beijing Hotel, specifically targeting the Chinese market's demand and purchasing power.
According to incomplete statistics from the organizing committee, about 7,000 people visited the exhibition in the three days, and around 500 of them reached tentative agreements on housing purchases or investments.
The most demand comes from those studying abroad
In front of the booth of Houston's mosaic project, a life-sized cardboard figure of Yao Ming attracted visitors. According one person, the project is only a 10-minute walk from the Toyota Center in Houston, the gymnasium in which Yao frequently competes. The project provides houses at different prices, from 260,000 USD to over 1 million USD.
Miss Ruan, who came to inquire, will soon graduate from university and is applying to study in the US. "I also applied to universities in Houston, so I came specifically to inquire about houses after I heard about this housing exhibition," Ruan said. "The media has said that housing prices in the US have declined sharply. If prices are really cheap, perhaps buying a house will be more cost-efficient than renting one."
Reporters randomly interviewed dozens of visitors at the exhibition. Most of the visitors said their children are preparing to study in the US. According to the organizing committee, most of the tentative agreements on purchases reached at the exhibition are for residential properties, and most of these residential properties will serve as accommodations for the owners' children while studying abroad.
In addition, some institutions also promoted projects for investment and immigration purposes for the sake of attracting buyers.
Chen Jingguo, a realtor from the Phoenix region, said that the situation in the US is similar to Beijing. After March this year, the housing situation in some major US cities showed signs of recovery. After housing prices were reduced, the volume of sales soared. "Our insiders believe that housing prices at present have already bottomed out and it is a good opportunity to buy," said Chen, who has nine years of experience as a realtor.
Consumers should be cautious of exhibitors whose main purpose is to raise awareness
One exhibitor from Miami said that they do not have a specific sales target for this exhibition, and their main purpose is to introduce and give visitors an awareness of their city and projects.
Reporters found that most of the exhibitors presented their housing projects with photos, videos and text materials. Only two or three exhibitors displayed clay models of their projects. A visitor Mr. Lin said, “Even though there are clay models, it is still quite hard for me to make a purchase decision based on the information they provide. It is too far away after all.”
Reporters learned that several similar trade fairs will be held this year in cities including Tianjin, Shanghai and Shenzhen.
At the exhibition site, low prices are an important selling point for the real estate developers. A Seattle-based company even hung an advertisement offering “up to 63 percent discount.” Of these houses, one villa in the suburbs with an original price of 12.8 million USD is being sold at just 4.799 million USD. This company also offers a piece of undeveloped land with an average price of 6 USD per square meter.
According to Lin Lin, the properties from her company are for the most part selling below 300,000 USD. “Most of these houses are properties auctioned by banks which we called “bank-owned properties.”
“Actually, I do not recommend purchasing a ‘bank-owned property.’ If consumers want to buy such houses, they should go and inspect the houses,” said Chen Jingguo. “These houses may involve legal risks and unknown debts, and their values are not certain to rise.”
Moreover, high carrying costs also make housing prices in the US only appear “cheap.”
According to industry insiders, consumers pay not only the price of a house, but also annual property taxes levied by the government based on appraisal values (which is at least one percent of the appraisal price), as well as expenses like management fees and daily repair costs.
By People's Daily Online
Can't you just see all of those Chinese buyers showing up for future "tea parties?" "What is this thing called property taxes that your government takes from you?"