3 ms·

For every buyer there is also a seller. Usually, with real estate that seller goes on to buy more real estate (or if they were a developer, build more buildings

• nugget 11y ago
  If you've lived through previous real estate cycles you know that prices can move very fast, especially to the down side. It would probably take 2 out of 3 of the following in order to trigger this in the Bay Area: meaningful interest rate hikes, market crash/tech firings, foreign money meaningfully drying up. One of the three would cause a slowdown but 2/3 causes the next real dip. It might not happen in the next couple years but it will happen at some point (''this time it's different'' - no). I don't know what you mean by ''usually'' but I'll say that about 30% of the Bay Area sellers I see move into other similar property (as evidenced by the filing of 1031 tax documents) and 70% either cash out an investment property and take the cash (almost all inherited properties fit in this bucket since the tax basis is market value and there is no tax due) or sell their primary home and move to a LCOL. I personally have no problem with foreign buyers participating in the market but we should incorporate this information into the debate about how to handle land use, zoning restrictions, and land taxation in the future (e.g. if foreign investors become a major ownership group in California, presumably residents would be in favor of higher property/land use taxes).