READ ABOUT DETROIT AND SOLUTIONS TO ITS PROBLEMS. CLICK HERE.

Tuesday, April 14, 2009

Chinese Find Our Ways Inscrutable

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.
_________________


15:22, April 13, 2009
US housing exhibition aims at Chinese market


(Xinhua Photo)

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

(Xinhua Photo)

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."

(Xinhua Photo)

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.

(Xinhua Photo)

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

(Xinhua Photo)

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.

(Xinhua Photo)

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

http://paper.people.com.cn/rmrb/html/2009-04/13/content_231631.htm
I think those U.S. realtors may have understated the tax aspect somewhat.

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?"

..

Labels: , , ,

Can"t Find It?

Use the SEARCH BLOG feature at the upper left. For example, try "Global Warming".

You can also use the "LABELS" below or at the end of each post to find related posts.

Blog Archive

Cost of Gasoline - Enter Your Zipcode or Click on Map

Detroit Gas Prices provided by GasBuddy.com
Click here to add this map to your website.

CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates

FEDERAL RESERVE & HOUSING

SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006 Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
November 28, 2007 FED VICE CHAIRMAN DONALD KOHN
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."
http://www.reuters.com/

December 11, 2007 Somehow the Fed misses the obvious.
fed_rate_moves_425_small.gif
[Image from: CNNMoney.com]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.”
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

My photo
Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)