Selling California to the Chinese September 13, 2013Posted by geoff in News.
I constantly toy with the idea of moving back to SoCal, but I’ve been discouraged lately by the prices: real estate is heating up, with homes selling at prices almost 25% higher than last year. Seems like good news, “But how?” you ask. Good question – it’s not like our labor market is all that.
The clue comes a bit later in the article I linked above:
Cash buyers made up 27.6 percent of total transactions last month compared with 30 percent in July and 32 percent in August 2012.
These days “cash buyers” mostly mean people from China, who find that our real estate market is more stable and lower priced than the market back home.
But let that soak in for a second. 30% of home sales in Southern California are likely to be foreign (esp. Chinese) buyers. The same thing is happening in the Bay Area, and may even be more prevalent there. And commercial real estate is seeing the same levels of investment from abroad.
Same thing happened in the 1980s with Japan, so these waves of foreign real estate purchases come and go. But when the waves get this large they give me a queasy feeling.
And they’re certainly no indicator of economic recovery, much as realtors would like to think so.