The U.S. may no longer be the wealth hiding place of the uber rich. A recent NY Times Article explains the U.S. Government’s concern with these unknown buyers and thus, the Treasury Department is cracking down and will now keep tabs on the use of illicit money in the purchase of luxury properties.
The movement has already begun in Miami-Dade County and Manhattan, which means Los Angeles remains a safe haven for the wealthy to park their money with discretion – for now. Real estate companies will now be required to include names in any and all cash transactions, apart of a larger effort to put an end to money laundering. Sales that will stand out to the Treasury Department will be those that are all cash using shell companies.
In an investigation performed by ‘The Times,’ they found that “nearly half of homes nationwide worth at least $5 million are purchased using shell companies. In Manhattan and Los Angeles, the figure is higher.”
So what does this mean for us? More and more foreign Buyers will continue flocking to the United States to park their money with discretion in real estate holdings, however, their geographic focus will likely be targeted towards Los Angeles. While the 2nd quarter has presented softening in the market in regards to numbers of sales, sales prices continue to be strong (and climb in some areas) as Los Angeles remains and seems to continue being a hot Seller’s market.