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Most of my friends that have tried to buy a house in the San Francisco Peninsula have been outbid by Chinese paying 110%,with cash.

by TwoBit 11y ago

rgovind 11y ago
Someone posted a link here saying only 10% of houses were sold to chinese investors, meaning not enough to influence the bids.
- nedwin 11y ago
  Also from what I'm seeing winning bids in this market are at least 120-130%
- crdb 11y ago
  It's a good point that prices in many countries are driven domestically (Australia!), however, I'd add/counter two arguments: - there's a few papers out there (alas, I don't have them) that show that you can go as low as 4% active investors and still have an efficient market (although I'm not sure to what extent this extends to real estate purchases); - even if the Chinese were not to touch real estate and stuck to treasuries, massive demand for treasuries would lower the cost of capital for everything else and therefore drive all asset prices (including and especially real estate) through the roof. FWIW we recently went to visit some houses in Sydney, and 90% of those doing the tours were non-English-speaking Chinese. About half the agents were also Chinese, some with limited English skills. Anecdotes, not data, etc.
- CamperBob2 11y ago
  10% of transactions is enough to dramatically influence real estate prices. They become comps for subsequent sales.
- nugget 11y ago
  It's more than 10%. Many Chinese buy via LLCs which makes ownership impossible to determine. I work with one HOA board in Seattle where 50% of the units are now owned by Chinese investors. They are debating whether to pass a restriction on renting out units (limited to some % of total units, and you have to join a waiting list until new spots open up). This type of restriction eliminates investors but immediately drops market value by 20%. Similar to the co-op system in NYC. Talk to a high volume realtor in SF, LA, Seattle, or NYC and you will hear directly from them how many foreign buyers are influencing the market.
hanklazard 11y ago
Ditto in Cambridge, MA. Very frustrating for a number of my friends trying to buy a house.

Most of my friends that have tried to buy a house in the San Francisco Peninsula have been outbid by Chinese paying 110%,with cash.

by TwoBit 11y ago

Most of my friends that have tried to buy a house in the San Francisco Peninsula have been outbid by Chinese paying 110%,with cash.

rgovind 11y ago

Someone posted a link here saying only 10% of houses were sold to chinese investors, meaning not enough to influence the bids.

nedwin 11y ago
Also from what I'm seeing winning bids in this market are at least 120-130%
crdb 11y ago
It's a good point that prices in many countries are driven domestically (Australia!), however, I'd add/counter two arguments: - there's a few papers out there (alas, I don't have them) that show that you can go as low as 4% active investors and still have an efficient market (although I'm not sure to what extent this extends to real estate purchases); - even if the Chinese were not to touch real estate and stuck to treasuries, massive demand for treasuries would lower the cost of capital for everything else and therefore drive all asset prices (including and especially real estate) through the roof. FWIW we recently went to visit some houses in Sydney, and 90% of those doing the tours were non-English-speaking Chinese. About half the agents were also Chinese, some with limited English skills. Anecdotes, not data, etc.
CamperBob2 11y ago
10% of transactions is enough to dramatically influence real estate prices. They become comps for subsequent sales.
nugget 11y ago
It's more than 10%. Many Chinese buy via LLCs which makes ownership impossible to determine. I work with one HOA board in Seattle where 50% of the units are now owned by Chinese investors. They are debating whether to pass a restriction on renting out units (limited to some % of total units, and you have to join a waiting list until new spots open up). This type of restriction eliminates investors but immediately drops market value by 20%. Similar to the co-op system in NYC. Talk to a high volume realtor in SF, LA, Seattle, or NYC and you will hear directly from them how many foreign buyers are influencing the market.

hanklazard 11y ago

Ditto in Cambridge, MA. Very frustrating for a number of my friends trying to buy a house.