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How about a check on foreign realestate investment? I have a fantasy where China starts looking into homes its nationals own throughout the Bay Area in search o

How about a check on foreign realestate investment? I have a fantasy where China starts looking into homes its nationals own throughout the Bay Area in search of lost revenue, wherein the prices collapse because of a selling frenzy. The reality is that many of the foreign-owned homes here are owned by shadow offshores which are very hard to track.

jbverschoor 10y ago
And Amsterdam!
ninjaroar 10y ago
Do you really think China has a bigger impact on bay area housing than overpaid tech workers funded by venture capital?
- Hydraulix989 10y ago
  Definitely.
- dwaltrip 10y ago
  They don't need to have a bigger impact. A secondary cause shifting radically could easily affect the market noticeably, especially in specific segments. Btw, tech workers from venture backed startups generally make less than those working for the profitable tech giants, so it's a bit disingenuous to call them overpaid.
- kobeya 10y ago
  As someone who recently bought a house, yes. We lost two houses to people who were bidding cash, even though they bid at a slightly lower price (cash closes fast). One was Chinese and the other was Russian. It makes the local tech workers paying with loans try to top the foreign bidders. But by the next sale the foreign buyers are bidding even more because they are sitting on piles of cash and can afford to do so. It's a real effect that every single person in the real estate industry we interacted with commented on. Also, you're giving yourself away as an outsider because VC-backed firms significantly underpay compared with the profitable tech giants.
- erikpukinskis 10y ago
  Overpaid tech workers are a tiny sliver of the population of the bay area. There were very wealthy people in SF long before Twitter moved there.
landryraccoon 10y ago
Do you have any hard numbers or sources? I hear this claim repeated online, but it feels like a stereotype. Is there actual data on what percentage of real estate transactions involve a foreign buyer?
- dmitrygr 10y ago
  Try buying a home here, you'll see. When I was doing this, I made ~ 15 offers. In all but one I was outbid by a cash-only no-inspections no-conditions offer from china, with the buyer not even present in the country - represented by agent only.
- intopieces 10y ago
  > For the fourth year in a row, buyers from China ranked first among foreign nationals purchasing property in the United States, according to a survey by the National Association of Realtors (NAR). U.S. home sales to Chinese nationals totaled $27.3 billion — exceeding the total dollar sales figure of the next four countries in the rankings combined, the survey showed. ... In San Francisco Bay-area locations such as Palo Alto and Woodside, home prices have risen by double digits in the past three years, while the number of buyers from China has nearly doubled since 2012, says Penelope Huang, a broker with Re/Max Distinctive Properties. The increased demand is making the area one of the toughest for younger buyers, she says. https://www.washingtonpost.com/realestate/wealthy-chinese-buyers-are-a-growing-force-in-us-real-estate-markets/2016/10/13/15ab3cba-7441-11e6-8149-b8d05321db62_story.html https://www.washingtonpost.com/realestate/wealthy-chinese-bu...
  - phil21 10y ago
    Being the largest in a small pool doesn't mean a lot. What % of the total home sales are to foreign residents in the bay area, and what % of those are Chinese? I think you'll find it's very likely less than 5% - not nearly enough (imo) to move a market enough for it to "crash" if they were to pull out.
    - intopieces 10y ago
merkleee 10y ago
Usually, when people from another country buy something in our country, we call it an "export" and cheer it on. In this case, because housing construction is limited, we consider it a bad thing. What if instead, we allowed developers to build more housing to sell to those foreign buyers? So we could not only have enough homes for locals, but also improve the national trade balance. Imagine if we only allowed American car companies to build 1 million cars per year, and them complained about the damn Chinese buying up all the cars.
- hkjgkjy 10y ago
  There is still only a limited amount of space in the attractive parts of a city, even if you are allowed to expand the city freely.
  - merkleee 10y ago
    There is a limit, true, but that limit is 60 story high-rises. I doubt foreign demand would hold up very long if we built a few of those, but in any case, the union construction jobs, the aggregate demand, the development fees, and the letup in competition for ordinary housing would all be welcome.
    - bottled_poe 10y ago
      It is an interesting problem, since the construction of said high-rise buildings would itself affect the value of property in the area for many reasons (beyond just the increase in the supply).
_coldfire 10y ago
China should simply go into another jurisdiction and start investigating it's nationals? It doesn't work like that. They already have an annual limit of $50,000 that can be transferred out of the country, they also ask foreign countries for help in identifying corrupt officials and individuals transferring large amounts out of the country, rich Chinese have strategies to avoid the law. In my own country i've seen that request largely ignored. The benefits are simply too high, the Govt here is well aware that sizable portions of this money is likely dirty money, but the bottom line for the economy eases that discomfort. The push to crack down on foreign housing investment in cities across the world lately has been driven by angry locals and soaring house prices, despite the Chinese govt asking for something to that effect for over a decade.
- aminok 10y ago
  >The benefits are simply too high, the Govt here is well aware that sizable portions of this money is likely dirty money, but the bottom line for the economy eases that discomfort. The money isn't 'dirty'. It might be breaking the Chinese government law against transferring more than $50,000 worth of currency out, but that doesn't qualify it as dirty. The law is an infringement of their citizens' right to control their own money. Just because the Western democracies have similarly authoritarian laws these days doesn't make them just and people breaking said laws the equivalent of a corrupt official moving the proceeds of bribes overseas.
- baybal2 10y ago
  One word: LONDON

jbverschoor 10y ago

And Amsterdam!

ninjaroar 10y ago

Do you really think China has a bigger impact on bay area housing than overpaid tech workers funded by venture capital?

Hydraulix989 10y ago
Definitely.
dwaltrip 10y ago
They don't need to have a bigger impact. A secondary cause shifting radically could easily affect the market noticeably, especially in specific segments. Btw, tech workers from venture backed startups generally make less than those working for the profitable tech giants, so it's a bit disingenuous to call them overpaid.
kobeya 10y ago
As someone who recently bought a house, yes. We lost two houses to people who were bidding cash, even though they bid at a slightly lower price (cash closes fast). One was Chinese and the other was Russian. It makes the local tech workers paying with loans try to top the foreign bidders. But by the next sale the foreign buyers are bidding even more because they are sitting on piles of cash and can afford to do so. It's a real effect that every single person in the real estate industry we interacted with commented on. Also, you're giving yourself away as an outsider because VC-backed firms significantly underpay compared with the profitable tech giants.
erikpukinskis 10y ago
Overpaid tech workers are a tiny sliver of the population of the bay area. There were very wealthy people in SF long before Twitter moved there.

landryraccoon 10y ago

Do you have any hard numbers or sources? I hear this claim repeated online, but it feels like a stereotype. Is there actual data on what percentage of real estate transactions involve a foreign buyer?

dmitrygr 10y ago
Try buying a home here, you'll see. When I was doing this, I made ~ 15 offers. In all but one I was outbid by a cash-only no-inspections no-conditions offer from china, with the buyer not even present in the country - represented by agent only.
intopieces 10y ago
> For the fourth year in a row, buyers from China ranked first among foreign nationals purchasing property in the United States, according to a survey by the National Association of Realtors (NAR). U.S. home sales to Chinese nationals totaled $27.3 billion — exceeding the total dollar sales figure of the next four countries in the rankings combined, the survey showed. ... In San Francisco Bay-area locations such as Palo Alto and Woodside, home prices have risen by double digits in the past three years, while the number of buyers from China has nearly doubled since 2012, says Penelope Huang, a broker with Re/Max Distinctive Properties. The increased demand is making the area one of the toughest for younger buyers, she says. https://www.washingtonpost.com/realestate/wealthy-chinese-buyers-are-a-growing-force-in-us-real-estate-markets/2016/10/13/15ab3cba-7441-11e6-8149-b8d05321db62_story.html https://www.washingtonpost.com/realestate/wealthy-chinese-bu...
- phil21 10y ago
  Being the largest in a small pool doesn't mean a lot. What % of the total home sales are to foreign residents in the bay area, and what % of those are Chinese? I think you'll find it's very likely less than 5% - not nearly enough (imo) to move a market enough for it to "crash" if they were to pull out.
  - intopieces 10y ago

merkleee 10y ago

Usually, when people from another country buy something in our country, we call it an "export" and cheer it on. In this case, because housing construction is limited, we consider it a bad thing. What if instead, we allowed developers to build more housing to sell to those foreign buyers? So we could not only have enough homes for locals, but also improve the national trade balance. Imagine if we only allowed American car companies to build 1 million cars per year, and them complained about the damn Chinese buying up all the cars.

hkjgkjy 10y ago
There is still only a limited amount of space in the attractive parts of a city, even if you are allowed to expand the city freely.
- merkleee 10y ago
  There is a limit, true, but that limit is 60 story high-rises. I doubt foreign demand would hold up very long if we built a few of those, but in any case, the union construction jobs, the aggregate demand, the development fees, and the letup in competition for ordinary housing would all be welcome.
  - bottled_poe 10y ago
    It is an interesting problem, since the construction of said high-rise buildings would itself affect the value of property in the area for many reasons (beyond just the increase in the supply).

_coldfire 10y ago

China should simply go into another jurisdiction and start investigating it's nationals? It doesn't work like that. They already have an annual limit of $50,000 that can be transferred out of the country, they also ask foreign countries for help in identifying corrupt officials and individuals transferring large amounts out of the country, rich Chinese have strategies to avoid the law. In my own country i've seen that request largely ignored. The benefits are simply too high, the Govt here is well aware that sizable portions of this money is likely dirty money, but the bottom line for the economy eases that discomfort. The push to crack down on foreign housing investment in cities across the world lately has been driven by angry locals and soaring house prices, despite the Chinese govt asking for something to that effect for over a decade.

aminok 10y ago
>The benefits are simply too high, the Govt here is well aware that sizable portions of this money is likely dirty money, but the bottom line for the economy eases that discomfort. The money isn't 'dirty'. It might be breaking the Chinese government law against transferring more than $50,000 worth of currency out, but that doesn't qualify it as dirty. The law is an infringement of their citizens' right to control their own money. Just because the Western democracies have similarly authoritarian laws these days doesn't make them just and people breaking said laws the equivalent of a corrupt official moving the proceeds of bribes overseas.
baybal2 10y ago
One word: LONDON