Updated: January 2014
Reports from Miami indicate that certain investors from South America, namely, Brazil, started to buy into empty Florida condominiums. This may be seemingly encouraging news, as it is a well known fact that the record sales of condos in Canadian cities, such as Toronto and Vancouver, are being mostly, if not solely supported by Chinese and other foreign investors, who have been buying Canadian real estate on an exceptionally large scale for quite some time now.
Troubling Thoughts on Foreign Buying of U.S. and Canadian Real Estate
By Dan S. Barnabic
The present surge in the sale of empty condominiums in Florida and other states hit by the 2006 real estate depression, and the record setting sales in major Canadian cities, may be fueling the real estate sector to continue breathing, but the long term view, if the foreign buying trend is to continue, looks troubling, if not outright scary.
The strong Brazilian economy has given rise to a newly emerging class of real estate buyers with more disposable investment income compared to the average American or Canadian citizen. Due to their superior purchasing power, financially strong foreign buyers can more readily afford to buy condos and traditional homes in the U.S. and Canada that are still, relatively speaking, inexpensive. Over time, foreign bidding wars will cause prices to become expensive and eventually completely out-of-reach to traditional Americans and Canadians, due to the ever-larger demands created by financially superior foreign buyers.
Let’s have a look at the Chinese phenomenon. Reports estimate that China may already have over 25 million millionaires. The real number may be much larger and growing by the day, given their national economic growth of over 9 percent in the last decade or so. Large numbers of these newly emerging wealthy individuals are looking forward to investing their money overseas, namely, in Canada and the U.S.
In fact, many of these foreign buyers aspire to one day emigrate to Canada and the U.S. Many Chinese investors plan to raise families with more than one child, to which they are currently restricted back home. An impending, foreign residential real estate invasion may be already at our hands.
Both Americans and Canadians may one day wake up to find out they had been economically occupied by financially superior foreign buyers who will maintain the prices of the real estate they bought at levels which our traditional citizens cannot afford.
Let’s look at it from another perspective. Canada’s population is about 33 million. Chinese, and other wealthy investors/immigrants’ continuation of real estate buying and applying to move their families into Canada, over the next 25 years, will give rise to a major demographic and consequently, geo-political shift, where the very culture and heritage of Canadian citizens will be affected, eventually to the point of no return. Even though the U.S. is a larger country, with a population of some 300 million plus, the very same script is written on the wall for them as well.
As it is highly unlikely that the average American or Canadian family will earn much more than 50-60 thousand dollars per year anytime soon, it will leave them completely inferior to newly arriving, wealthy immigrants from South America, Asia, and other places.
This new kind of “globalization” may eventually come to haunt us as our worst nightmare. Unless proactive, radical measures are taken by the U.S. and Canadian governments to protect their present citizens, by curtailing or capping the sale of residential real estate and agricultural land to foreigners, we may find out, in the not-so-distant future, that affordable housing would no longer be available to most of us.
Eventually, the average present American and Canadian folk will be lowered to the status of second class citizens in their own countries, unable to compete with financially superior newcomers, who would not only take charge of our economy but also threaten our very culture and way of life.
by Dan S. Barnabic