The biggest problem with the U.S. economy is housing prices. Why not ban foreign investment in U.S. real estate?
The real solution is to allow development. Asset prices are high because its mostly illegal to build new housing in coastal cities.
Sometimes this results in very inefficient transportation/location for actual legitimate companies that operate there and people who live there because of the dead weight real estate.
Foreign investments in Manhattan are usually rented out and are part of the housing supply.
Also, lots of the medium-height buildings are historic in nature, so demolishing them is not a very good option.
I agree that there could be some further development, but there should be some sort of regulation to avoid ghost-town status.
Had all of the apartments been rented out to actual residents, the picture would have been much better.
If this is common we should build more and take the money of these stupid foreigners. If we build enough, regulation is unnecessary - why prevent foreigners from giving us their money?
Perhaps subletting rent stabilized housing when the price increases further? In this case it wouldn't be much of a problem.
I haven't seen any statistics, just some anecdotal evidence for absentee renters, especially in the past two years.
Regardless, ownership is obviously a bigger problem.
It is not just stories and anecdote, there are large portions of high-end London real estate sitting empty because foreign buyers often do no want a tennant.
It reduces the price of owning a home not living in a home. We have this Chinese real estate money 'problem' in Toronto. It makes it so renting a luxury condo is actually cheaper than buying it and paying mortgage interest + property tax + maintenance.
Effectively rich Chinese people subsidize our cost of living in exchange for having a safe place to park their money :)
The only thing special about real estate investment is the massive government subsidies for it. (E.g., owner-equivalent rents are untaxed, mortgage interest is tax deductible, etc.) The best solution to that problem is simply to eliminate those tax subsidies.
This is fixable in multiple ways; start taxing imputed rent (tolerable) or stop taxing capital income (far better).
Have you seen what happened since the year started?
If you're thinking of dividends, just for 1k/mo apt you need to have 400k worth of a 3% yielding stock. 400k in a normal us housing market gets you much better than the 1k rent.
But then they would stop building them (or stop building such nice, expensive ones). I'm talking about brand-new 35th floor curtain-glass condos bought straight from the developer.
http://www.theprovince.com/business/Vancouver+critical+money...
the only people who are hurt are first-time home buyers who basically lack any power or influence in the economy and legal process.