patrick.net

bmwman91 says

Bay Area RE, even in the fortress, is CHEAP for Hong Kong business folks.

Do all bay area residents really believe the bay area is the center of the universe? That everyone on the planet is waiting with baited breath for the opportunity to relocate or at least buy there? Trust me, it ain't so joe. There are 10,000 eb-5 investment visa's with automatic green card for investor and family available for issue every year since 1992. The most ever issued in any year was under 4000. That means less than 4000 people in the whole planet were willing to put down cold hard investment cash to live in the US (not just the bay area, I know it's hard to believe but there is an entire country surrounding the bay area) in any given year. L-1, E-1, and E-2 visa's don't have any better numbers. So much for the millions of rich HK investors clambering to get here.

Why wouldn't the Hong Kong business folks just go to one of the many places on the planet that are just as nice while being both cheaper and without all the hassles of dealing with the US and the state of CA? Oh that's right, they do.

bob2356 says

The most ever issued in any year was under 4000. That means less than 4000 people in the whole planet were willing to put down cold hard investment cash to live in the US (not just the bay area, I know it's hard to believe but there is an entire country surrounding the bay area) in any given year. L-1, E-1, and E-2 visa's don't have any better numbers. So much for the millions of rich HK investors clambering to get here.

Yeah, exactly. Most people who say this stuff have no real knowledge about it. Here are the EB-5 visa numbers for the last few years:

* FY 2007 - 806 total EB-5 visas were issued
* FY 2008 – 1,360 total EB-5 visas were issued
* FY 2009 – 4,218 total EB-5 visas were issued

The FY 2010 number is estimated at 1886. The 2009 number was artificially high because there was a sunset clause which would have ended the EB-5 program on Sept 30, 2009. Congress extended this sunset by 3 years, but it pulled the demand forward.

Slightly less than half of the FY 2009 EB-5 visas were to China or Hong Kong -- other countries with a lot of people were South Korea and the UK:
http://www.travel.state.gov/pdf/FY09AnnualReport_TableV_3.pdf

Quote from a USCIS doc:

Between 1992 and 2004, 6,024 EB-5s were issued, which averaged approximately 500 per year. Government Accountability Office, Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors, p. 2 (Apr. 2005) (GAO-05-256).

For a while, EB-5 approvals were well under 50%, although there were some law changes around then that have raised the numbers more recently.

There are certainly other places to live with lower taxes and lower cost of living.

For comparison, Canada's numbers were above 4000 between 1998 and 2007 except for 2003, peaking at about 9500 in 2005, and that's partly because all it requires is to pour money into Canadian government-backed securities.

The EB-5 wasn't always an automatic green card either. Although recently only 15-25% of people have been getting their I-526s rejected (for 2010, only 11% were rejected), the number was almost 50% in 2006.

bmwman91 says

$HK60 for one beer?! Where/what were YOU drinking?!

It was a guiness..maybe it was 40 it was hard to say. Tasted exactly like from home though..from the tap.

bob2356 says

Do all bay area residents really believe the bay area is the center of the universe?

Definitely not. Personally, I think that the BA is way overrated. My only real reason for sticking around is having most of my immediate & extended family in the area. Beyond that, if I could convince my fiancee to pack up, move somewhere where the cost of living is 50% less & take jobs that pay 50% less, I would leave. The pay is not REALLY worth it in the BA, at least as long as buying a house is something we ever plan. We would be living paycheck to paycheck on a combined $200k gross income, or living with reasonable payments in a shitty wood-frame condo with exorbitant HOA dues. That is completely idiotic. Why so many people are desperate to get into the BA is beyond me.

The visa issuance info is interesting. Perhaps I made my argument out to be more than it actually was. I wasn't trying to indicate that folks from HK are flocking to the BA. RE is cheap there in comparison, and people I have talked to here (in HK now) seem to be paying some attention to BA RE prices. As previously mentioned, there are other, more fiscally advantageous places to go, and they also know that. Despite this, a LOT of Chinese/Taiwanese people do have a great deal of interest in the fortress based on what I have seen myself back home, and many of them seem to be able to afford it. Perhaps more of them are wealthy citizens (naturalized or born) than immigrants. Who knows, maybe the whole "rich foreigners buying everything up" idea is just white people trying to cope with the fact that a large non-white segment of society is taking (or earning, rather) their place as the dominant upper-middle class demographic (in the BA anyway). Maybe it is none of the above, I don't know! I don't particularly care either, but it does make for interesting discussion.

bmwman91 says

Perhaps more of them are wealthy citizens (naturalized or born) than immigrants.

This is probably the case. A large percentage of Asians in Cupertino, for example, have been here for a long time -- more than 10 years. There is census data to show this, and I have demonstrated this on Patrick.net before.

There are also lots of H1-B folks in the Valley and southern East Bay, but those people are not the ones buying expensive housing. Why would you buy an $800K house if there's no guarantee you might be able to stay longer than 3 or 6 years? And how the hell are you going to buy a fortress house on your lower-than-market H1-B salary after you made 1/5 of that back in your home country prior to that? Some portion of these H1-B-enabled people will get sponsored by an employer, but that's after they've been here for at least 6 years typically, maybe 7 if they get the one year extension while adjustment is pending. Even some H1-B people do buy houses despite not having a guarantee they might stay here, but typically it's in a much cheaper neighborhood than the so-called fortress pricing.

bmwman91 says

maybe the whole "rich foreigners buying everything up" idea is just white people trying to cope with the fact that a large non-white segment of society is taking (or earning, rather) their place as the dominant upper-middle class demographic (in the BA anyway).

That honestly seems to be the best explanation for "Asian hordes are taking over our real estate," attitude, I'd agree. Many of those rich "foreigners" speaking funny languages at open houses are permanent residents or citizens, not the fabled rich people fresh off the Boeing that our bailing out our housing woes.

SJ says

These Asians from China and India must be SUPER RICH to pay the outlandish prices for real estate here. I make six figures and cannot afford a home here.

Most people from China and India are savers. And not the oh I'll save 5% of my income for a rainy day fund. They save a good 30 to 40% of there income, before other expenses. They may live 4 to a room for several years, over time that kind of saving really adds up. They know the value of money, and how lucky they are to be earning a decent living. As opposed to the Americans who believe they are gods gift to the world and deserve a BMW, Iphone and to eat out every night of the week.

I firmly believe that anyone can save a good portion of there income if they really examine what they are spending there money on. Instead of shopping at the GAP for clothes, go to Goodwill. Instead of eating out 3 nights a week or getting that starbucks latte eat at home, brew your own coffee. Coupons are your friends, I read of extreme coupon stories where people are getting a month worth of groceries for under $100 and so on.

bmwman91 says

Who knows, maybe the whole "rich foreigners buying everything up" idea is just white people trying to cope with the fact that a large non-white segment of society is taking (or earning, rather) their place as the dominant upper-middle class demographic (in the BA anyway).

The flip side of that is the native middle class former homeowner (seller ) now has the $1M in cash because he sold at peak inflated prices, to the rich (now former rich) foreign buyer.

Who is the dominant upper-class now ? Someone is $1M poorer.

When people talk about the shift of wealth distribution today, the above certainly had an impact of enriching some due to high inflated prices of homes.

TechGromit says

As opposed to the Americans who believe they are gods gift to the world and deserve a BMW, Iphone and to eat out every night of the week.

After a couple of BMW break inspections at $2-3 a pop.
They will think otherwise.

thomas.wong1986 says

The flip side of that is the native middle class former homeowner (seller ) now has the $1M in cash because he sold at peak inflated prices, to the rich (now former rich) foreign buyer.

Who is the dominant upper-class now ? Someone is $1M poorer.

Yes, this is a very good point. Some people like to say, "the people living in [area] are much richer than the people who used to live there." And I like to say, absolutely not -- the people who live there now just gave a huge windfall by buying a house for an inflated price, and the prior owner is now the rich one.

thomas.wong1986 says

The flip side of that is the native middle class former homeowner (seller ) now has the $1M in cash because he sold at peak inflated prices, to the rich (now former rich) foreign buyer.

Who is the dominant upper-class now ? Someone is $1M poorer.

Sure. Still, prices in the "nice" areas are still largely inflated, and the native with $1M in cash from a sale will have to spend most of it to get into comparable house in a comparable area, or use it as a down payment and borrow even more to "upgrade." They have even less if they still owed the bank for the original purchase.

bmwman91 says

the native with $1M in cash from a sale will have to spend most of it to get into comparable house in a comparable area

Not necessarily. A condo in Florida goes for much cheaper, with no state tax and better homestead and pension protection. Win-win! Or maybe a ranch in Montana. The possibilities are endless.

The people who sold their houses at inflated prices have real hard money. A lot of other people have debt, not wealth.

corntrollio says

Not necessarily. A condo in Florida goes for much cheaper, with no state tax and better homestead and pension protection. Win-win! Or maybe a ranch in Montana. The possibilities are endless.

Oddly enough Billionaires Tomas Siebel and Ted Turner live in Montana.

> Job Loss Could Put One in Three Out of Their House

A little misleading title. This would imply that 2 out of 3 people have the financial resources to survive indefinitely without income from a job.

This reminds me of the movie "The company men". People who appear to be quite wealthy often have a lot of debt and no plan for what to do when the big paycheck stops rolling in.