Market Conditions: Are The Canadians Buying Up Chicago Real Estate?
We’ve all heard the stories of the Russians buying up trophy properties on the coasts. There have also been reports of the Chinese being big buyers in Vancouver.
According to a survey taken in June by the National Association of Realtors, foreign national buyers made up 8.9%, or $82.5 billion, of the $928 billion spent on U.S. residential real estate from April 2011 to March 2012.
That’s up sharply from the year before when it was just $66.4 billion.
Not surprisingly, more than 50% of those sales took place in just 5 states: Florida, California, Texas, Arizona and New York.
But that doesn’t mean Chicago is chopped liver.
According to the Forbes article, it is the Canadians who are buying up everything in our fair city.
“If the Chinese are the second-largest foreign buyers of U.S. homes, who’s No. 1? Our neighbors to the north in Canada. Canadians accounted for 24% of sales to foreigners in the year to March, according to NAR. And it’s not likely to let up: Realtor.com says Canadians account for the most international search activity on the listing site every month in nearly all of major U.S. metro areas.
Canadians have been a dominant purchasing force in hard-hit Sunbelt states like Arizona and Florida. A relatively weak greenback coupled with low home prices represents an opportunity to scoop up a home that could be used for vacations now and retirement later.
Canadians have also been buying in the Midwest, including Chicago. “Close proximity to Canada makes it an easy place for Canadians to invest money,” says Bob Krawitz of RE/MAX Signature in Chicago. He says interest runs along all price points, from distressed properties that can be fixed up and rented out to seven-figure mansions along Lakeshore Drive.”
Over the years, we’ve made fun of all the articles that said that foreigners would keep the market elevated. Remember the Spire and its global marketing plan?
But has that now changed?
Will an influx of foreign money put a floor under Chicago housing prices?
Real Estate Tourism: Who’s Really Buying America’s Homes? [Forbes, Morgan Brennan, August 10, 2012]
No need to freak out until the Canadians and Chinese start buying up the single family homes in Mt. Prospect. Then you have to worry.
To answer the question: Maybe, this article doesn’t say. It is mind boggling that we can read the same article and you suggest with a straight face that “it is the Canadians who are buying up everything in our fair city.”
“Canadians have also been buying in the Midwest, including Chicago. “Close proximity to Canada makes it an easy place for Canadians to invest money,” says Bob Krawitz of RE/MAX Signature in Chicago. He says interest runs along all price points, from distressed properties that can be fixed up and rented out to seven-figure mansions along Lakeshore Drive.”
“I’ll say whatever it takes to drum up interest and try to make some money,” Krawitz continued. “I can give you a good quote or just say something positive based on just a single data point, or no evidence at all. You think I got time to ask a man why he given me money or where he gets his money from, I’ll take any mothafucker’s money if he given it away! ” He said that he advised everyone to contact him and buy a property immediately, or at the very least just cut him a check or throw a twenty his way.
Well Chicago weather to Canadians is probably like Florida weather to us
Did anything ever come of the idea of giving foreigners who buy a home in the U.S. a residence visa?
http://www.bankrate.com/financing/mortgages/a-visa-for-foreign-homebuyers/
I’m not surprised. When my wife and I were shopping for our in-town, there was one building at which we looked where over 40% of the units had been purchased by foreign investors.
“I’m not surprised. When my wife and I were shopping for our in-town, there was one building at which we looked where over 40% of the units had been purchased by foreign investors.”
JOET: which one?
“JOET: which one?”
Century Tower
I get calls all the time from foreign nationals looking for financing.
“I get calls all the time from foreign nationals looking for financing.”
For real, or are you kind of winking at us and elbowing us with kind of a “know what I mean, wakka wakka?” sort of shtick?
JJJ, dead serious. The problem is there aren’t a ton of great financing options for foreign nationals as they usually have no US credit. Most banks won’t lend to foreign nationals anymore so most of the purchases are all cash. A few of the portfolio lenders that will lend require fairly substantial down payments > 30% and the rates suck (one I know of is in the 6s right now).
RBC (Royal Bank of Canada) bought the brokerage I worked for early in my lending days and we used to offer financing for “snowbirds”. Canadians looking to buy in the US, particularly Florida.
With that said, I don’t think foreign money is a huge factor in the Chicago market.
“JOET: which one?”
Century Tower
An Invsco property, man they know where to find the suckers. A couple years from now this one will be full of foreclosures.
‘With that said, I don’t think foreign money is a huge factor in the Chicago market.’
I tend to agree that it isn’t huge, but I can think of two houses in my area that were recently all cash buyers and all Chinese. A nanny manages one of the houses while the parents stay back home, and the kid attends Lab. Certainly not a trend, but certainly nothing I’ve ever seen prior to a couple of years ago.
Does this mean we will also see an dramatic uptick of Canadian tuxedos sightings in Chicago?
http://fuckyeahcanadiantuxedos.tumblr.com/
“No need to freak out until the Canadians and Chinese start buying up the single family homes in Mt. Prospect. Then you have to worry.”
Are you worried about the creepers following you to the suburbs, HD?
http://www.chicagotribune.com/news/local/suburbs/park_ridge/chi-park-ridge-police-say-man-attacked-and-spanked-girl-16-20120816,0,3483944.story
I believe there’s also a bill floating around to potentially give residency to foreigners who spend $500k or more on property in the US.
that spanking guy is odd. no mention of his explanation. just felt like spanking somebody it seems
“that spanking guy is odd. no mention of his explanation. just felt like spanking somebody it seems”
Is he an attorney?
I haven’t seen homedelete today….
“I can think of two houses in my area that were recently all cash buyers and all Chinese. A nanny manages one of the houses while the parents stay back home, and the kid attends Lab. Certainly not a trend, but certainly nothing I’ve ever seen prior to a couple of years ago.”
Mish has written about a Chinese hard-landing, and some nervous Chinese getting some of their wealth outside the communist country:
“In addition China itself is seeing noticeable capital outflows as business owners and other wealthy people begin disinvesting and withdrawing deposits.? Capital flight from China began surging in early 2010, and it seems to be getting worse, with some monthly withdrawal estimates as high as $40-50 billion.”
I live in mt prospect, not park ridge, too snooty for me in the country club area. I can walk to the mt prospect train station but I do lament the loss of randhurst mall, oh the memories from high school, it was like fast times at ridgemont except during the 90’s not the 80s
I’ve always said that prospect high school is ranked higher than new trier….
“I’ve always said that prospect high school is ranked higher than new trier….”
Really?:
http://www.suntimes.com/news/education/8475592-418/the-top-50-high-schools-in-illinois.html
E-gads HD, you sound like Lesko espousing how Cary is the greatest most perfect place on earth.
‘ Capital flight from China began surging in early 2010, and it seems to be getting worse, with some monthly withdrawal estimates as high as $40-50 billion.’
The limitless amount of real estate money from China (Russia and India too) is truly astonishing in SoCA. Sure they’re parking their wealth in some massive house, but who other than another Chinese investor is gonna pay more than the previous owner paid and still make a profit… certanly not an American. At some point, it seems as if the gig will be up. It is entertaining though, to watch a Chinese play’a driving a pimped-out Bently to Costco to buy big bags of cheap frozen tasteless farm raised shrimp.
“At some point, it seems as if the gig will be up.”
The gig is already up. And everyone knows it. But as Chuck Price of Citi fame once said right before the market crashed:
“As long as the music is playing, you’ve got to get up and dance…..(and) We’re still dancing.”
People accuse me of being a doom and gloomer but I’m not really, I’m a realist, and even a precursory following of Chinese developments leads the casual observer to surmise the ‘gig is up’.
Property tax, the gift that keeps on giving.
Okay HD, say the gig is up. What do you do? Stockpile canned beans and dig a back yard bomb shelter? Don’t have kids as to bring them into a potentially fatal world? Have you done either? Or, do you spend with some caution, save with some caution, and basically just get on with life. I just don’t see a lot of options out there for 99% of us.
Jay, I have children and I’ve stockpiled beans. But you are right there are no choices for 99% of us. But that doesnt means you won’t be affected. The economic double recessions begins when the greater world recognizes the Chinese slowdown.
China is a demogrpahic timebomb, think japan but worse.
Those Canadian “cash” buyers are getting it from a HELOC back home. Their bubble is bigger than ours but “it’s different there.”
Foreign knifecatchers are a gift to our taxpayers. However, they do delay the ongoing increase in housing affordability. Take note sellers, now is your chance to unload.
lets get this part straight:
it is NOT the “Relatively weak usd”
the loon has been par or close to it
its the oil money
THATS RIGHT
THOSE CANADIANS DO SOMETHING WE DONT ALLOW, generally speaking
they “allow” dig baby dig” and their oil has been keenly purchased by those in need, not the LEAST WHICH IS THE US OF A, who for the past 40 years has had the “earth movement” ( aka as leftwing nuts) dictate our policy
to take us away from being #1
the last decade has had the Canadians with their oil AND POTASH really give them buying power
got to love the socialist who loves their capitalism
carry on my wayward son
the Chinese are going to colonize the West Coast, they could export 100 million people as a release valve. They already own 40% of San Francisco proper and in suburban Vancouver they have massive Chinese-only regional shopping malls, and they own tons of property there too. I don’t think they’re suckers.
“I’ve always said that prospect high school is ranked higher than new trier….”
Can we at least agree that Prospect is an excellent high school? Any of these schools in the top 50 are excellent. All the other “ranking” factors are so subjective anyway.
Ran this by a Canadian relative this weekend.
To further give you a brain freeze, he said the Canadians who are buying Chicago real estate are actually Chinese Canadians from Toronto and Vancouver.