8 ms·

I'm sure the fact that there's an increasing trend of empty Chinese investment properties isn't helping. I grew up in Cupertino, and when I visit my parents the

• andrewmcwatters 10y ago
  It seems to me the real answer is to leave. This town ain't big enough for everybody. Mass transit isn't going to solve this problem.
  • windlep 10y ago
    Yup, it can just become 50% empty investment properties, and folks can scrounge for what's left. Some solution is going to be needed to prevent that situation, though maybe with all those empty houses, there'll be less people to make traffic so bad.
    • ethbro 10y ago
      Just tax unused properties at a higher rate. Speculative investment wouldn't be as bad if they were rented.
      • muzz 10y ago
        A Texas-sized property tax rate would do the trick
        • kurttheviking 10y ago
          Or, a proper Land Value Tax[1] [1]http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-0 http://www.economist.com/blogs/economist-explains/2014/11/ec...
    • Semiapies 10y ago
      If lots of people leave, investing in property won't be as attractive, and folks will have more to scrounge among. But then, this is SF's usual cycle.
• yock 10y ago
  > I grew up in Cupertino, and when I visit my parents there, I'm rather shocked at how downhill the neighborhood has gone in parts. It's crazy that these old 70's tract homes go for 1.5 million. Even more insane is that they're bought and then left empty to go downhill. Literally broken windows and paint falling off. I never used to see that. Do you have any idea what's behind this?
  • oxryly1 10y ago
    Chinese capital chasing the California real estate dream?
  • windlep 10y ago
    I'm inclined to believe many are empty investment properties. A documentary about the housing costs showed a Chinese investment tour of Cupertino for such purpose: https://youtu.be/SBjXUBMkkE8?t=2m35s https://youtu.be/SBjXUBMkkE8?t=2m35s The other issue is that the high school I went to there, Monta Vista High School, is extremely well-ranked. As such some investors buy houses, then rent them to a single custodian who boards as many students as possible so they can attend the schools. These custodians don't seem to have a high priority on keeping the house in great shape.
    • ethbro 10y ago
      > As such some investors buy houses, then rent them to a single custodian who boards as many students as possible so they can attend the schools. These custodians don't seem to have a high priority on keeping the house in great shape. This sounds like student housing in any major city.
      • muzz 10y ago
        This is also why cities have occupancy rules, codes for maintenance, etc.
    • telotortium 10y ago
      Actually, I stumbled upon a Deleon (a major realtor in the South Bay) brochure yesterday, and due to the prices, they're willing to pay for a lot of complementary services to get your house sold (not surprising, since a $2 million sale will give the selling agent $60k, by the customary 3% fee, and they can make even more money if the buying agent is also employed by them). One of the services they advertise is ads on Chinese radio and newspapers.
• rubicon33 10y ago
  > "I'm sure the fact that there's an increasing trend of empty Chinese investment properties isn't helping." This. This. This. A couple of years ago, I found myself utterly shocked by the price of homes in San Francisco. In a fit of frustration, I fired off a few emails a few random real estate firms in SF, asking one simple question: "Who the BLEEP can afford these homes?" You see, I was frustrated. I have a great job, great pay, and yet I can't even come close to buying a home in the city I live in. The responses I got were jaw dropping, if not infuriating. The #1 purchaser at 2 of the 3 firms I emailed, were foreign investments. Unused, speculative, investments. I am shocked that land isn't more protected in this state. It seems strange to me, that someone living thousands of miles away, can buy a piece of land with a home on it, thereby shrinking the available market, and driving up the price of housing. This means people who live in, work in, and contribute to, their local community, can't even afford to buy a home there. The fact that this isn't seen as a full on crisis, confuses and saddens me.
  • davidw 10y ago
    What would make it a less interesting investment is if there were a credible threat to add enough supply to devalue it. That's generally how markets keep prices regulated: if they go up enough, more people jump in to producing the good. That mechanism is severely broken in the Bay Area, among other popular places in the US.
    • ericd 10y ago
      Alternatively, repealing Prop 13, so that property taxes rise with the value. Or increasing property taxes as you get more homes. Both of these would decrease housing prices significantly.
      • muzz 10y ago
        Given that the supply of land cannot be increased (the huge omission in GP's argument), repealing Prop 13 is indeed a large part of the solution.
• brianmcconnell 10y ago
  Two doors from my house is a deluxe 3 unit condo building that has been uninhabited for years. Not once have I seen any evidence of anyone living there. The units went for little under $2 million apiece. It makes me wonder what will happen if/when China has a financial crisis and people start trying to liquidate their offshore piggy banks.
  • cpitman 10y ago
    Exactly! If this is indeed a major factor, could we see the SF housing market nose-dive if/when the Chinese market does at the same time? Or if/when better investment vehicles become available to them domestically?
• cbhl 10y ago
  > Until the South Bay gets serious about mass transit, merely adding more housing is only going to make the traffic pain worse. This seems very chicken-and-egg. SF has a million dollars in its annual budget tied up in maintaining the status quo for homelessness -- if those people had homes, that money could get redirected into mass transit.
  • steffan 10y ago
    > SF has a million dollars in its annual budget... A million? If only. Try $241M http://www.sfchronicle.com/bayarea/article/S-F-spends-record-241-million-on-homeless-6808319.php http://www.sfchronicle.com/bayarea/article/S-F-spends-record...
• muzz 10y ago
  > Literally broken windows This would be a code violation. Neighbors would in theory be reporting it.
  • jandrese 10y ago
    They can report it all they like. The city (or HOA) will send a letter to the homeowner demanding that they fix it. If the don't fix it in a few years then they'll send a second letter or may go as far as to take a lien out on the property. What doesn't happen is that the window gets fixed.
    • muzz 10y ago
      No, it's not "a few years". Cities act very quickly on this since broken windows make the dwelling open to all sorts of problems like animals coming in, people coming in (trespass, drug den, etc).
      • jandrese 10y ago
        It was 3 years in my case, and they were only fixed because the house was finally foreclosed and sold to someone else. Critters had definitely moved in, and there was lots of water damage too. It was a real problem for me because it was a townhouse attached to mine. That was the last time I ever owned an attached dwelling.
        • tomcam 10y ago
          Painful to read. Sorry that happened to you.
• GigabyteCoin 10y ago
  >empty Chinese investment properties It's like this all over North America. Not just the west coast. I lived in a chinese-built condominium in Toronto a few years ago, and the rumor was that 50% or more of the building's units were owned by absentee landlords. Which made sense, because almost the entire building was seemingly vacant. Hardly any lights on at night. No furniture on most of the balconies. Never had to wait for an elevator (at 30+ floors, that is strange). Always ample visitor parking spots when there was only 15 of them shared between ~300 units. And I knew most of the neighbors on my floor, would see them come and go regularly, but there were always a few apartments that just never made any noise.
  • bashinator 10y ago
    Why aren't more people squatting in these? My understanding is that if you can maintain "tenancy" for 30-60 days(?) you gain all sorts of rights.
    • imaginenore 10y ago
      Startup idea: Squattr
    • GigabyteCoin 10y ago
      I suppose because there are security guards and cameras in these buildings and that nobody is able to knock on every door for months on end to determine which apartment is vacant and which one is not. Especially difficult for someone who fits the profile of needing a permanent residence.
• hkmurakami 10y ago
  I have to question the moral scruples of many of the real estate brokers who are selling these inflated properties to Chinese investors as if they are can't miss, can't fall, foolproof investments. A real estate friend has actually refused to represent clients on the buy side for a couple of years now since he cannot in good conscience facilitate a transaction that he seems as questionable in judgment.
• rtsuk 10y ago
  I live in Cupertino, near DeAnza college and the Garden Gate elementary school, and I see no sign of broken windows or peeling paint. The prices are crazy. I'm not sure what developments you are referring to, but the Main Street and Hills developments are running shuttle buses to caltrain. The one by the Oaks shopping center certainly seemed ill-advised, but it got shut down by the city council.
  • windlep 10y ago
    The neighborhood around Kennedy Jr High School and Monta Vista High School. Many houses over the past decade became mini-mansions for awhile, but the recent trend seems to be ignoring basic house maintenance. I didn't mean to imply there were lots of houses like this, but even two houses kept up poorly on a single street in this area is a relatively new thing.
• eldavido 10y ago
  What's needed is a property management firm that caters to these people. There's no reason for houses to sit empty. They're much more economically productive (a nice way to say "profitable") with tenants in them.
  • DanielDent 10y ago
    There are plenty of property management & other real estate firms in Vancouver which cater to foreign owners. But the math on renting isn't actually so straight forward. A 10-20 year old building in Vancouver will have many units with kitchens that have literally never been used. There's wear and tear and a lot of extra work and risk that comes from renting a place. And as odd as it may sound, the resale value can take a hit when a property is "used". Unlike San Francisco, rents in Vancouver have not gone through the roof. Recently AirBNB seems to have put some upward pressure on rents, but rents still remain fairly detached from capital costs. Frankly, the rental income is almost a rounding error. Vancouver real estate is about capital, not cash flow. It's a place to store capital (which in and of itself is quite valuable for many foreign owners), and current supply/demand trends also lead to price appreciation. Traditional views of real estate market fundamentals are nearly irrelevant to the observed behaviour of the Vancouver real estate market.
    • eldavido 10y ago
      So, if I may summarize, you're saying that there's a lot of demand for safe-haven assets by investors whose priority is capital preservation? I don't see the math on this working out. Have you been in a house that hasn't been occupied? Things depreciate: roofs leak, water pipes break, floors rot, bugs get in, etc. Given a sane property rights regime (something notably absent from San Francisco), I would vastly prefer real estate I own for investment purposes to be occupied. Tenants make sure the place is at least habitable, pay rent, and you can feel good as an owner about giving someone a place to live. I get that the market may not view it that way, but I think the market is wrong, and maybe that's an opportunity in and of itself. Honest question: do Chinese people understand capitalism? Even poor people in the US have some inkling of understanding about the stock market -- it's on TV, in the newspaper, the presidential primaries, etc. I get that the main motivation might be just getting capital out of China and into the US, but I really don't understand the investment thesis of holding empty real estate, at all.
• hnnicker 10y ago
  Why aren't the investment property homes being rented out? Seems like an entrepreneur could pitch a service to the overseas owners to rent out the house, do all maintenance and insurance, pay the property tax from the rental income, and get a slice of the remaining profit.
• pjlegato 10y ago
  > SF where transit is decent Transit is abysmal in San Francisco. Muni is an utter disaster. The fact that it exists doesn't make it "decent." Cities with decent public transportation include Berlin, Munich, Zurich, Moscow, Tokyo, Hong Kong, Taipei, Portland. Even New York is much better. SF is a far cry from any of those.