4 ms·

"Chinese money" has had a significant effect on the $5M+ market. And it adds a lot of liquidity to the condo market, by buying presale condos and then selling

"Chinese money" has had a significant effect on the $5M+ market. And it adds a lot of liquidity to the condo market, by buying presale condos and then selling them when buildings near completion. But the amount of mid-market housing which is owned by offshore owners is too small to explain more than a small part of the housing bubble.

seanmcdirmid 9y ago
It is the $1M+ market from what I heard, and it mostly ate up the mid market. Vancouver real estate crashed for a decade when the Japanese asset bubble popped (remember you could buy a condo for $100k in the late 90s?), this is just history repeating itself.
- cperciva 9y ago
  If you count the number of transactions, then yes there's a lot in the mid-market range. But most of that is buying and selling presales; it doesn't affect the supply, because it's not eating up any housing units which actually exist. (In fact, there's a strong argument that this increases housing supply, since a strong presale market encourages more construction.) The real estate crash you're talking about had nothing to do with the Japanese economy; it coincided with the Hong Kong handover and an overnight 50% reduction in immigration. Keeping the supply of new homes fixed while the number of prospective new homeowners dropped dramatically had exactly the effect one would expect...
  - seanmcdirmid 9y ago
    There are a lot of Chinese with Canadian citizenship who are not foreigners but are still leveraging foreign sources money in their real estate transacstions. Vancouver (and Toronto's) exposure to the Chinese asset bubble is much more pronounced then it looks even on paper. Anyways, salaries provided in those cities are nowhere near sufficient to support the real estate markets being driven right now primarily by Chinese money. It won't end well at all, it will be very predictable in hindsight. Seattle is very different. Sure, we have our share of Chinese speculation, but it is the $200k salaries driving most of the bubble. It doesn't pop until tech does.
  - nodamage 9y ago
    > If you count the number of transactions, then yes there's a lot in the mid-market range. Do you have a source for this? And is it specific to Seattle? > But most of that is buying and selling presales; it doesn't affect the supply, because it's not eating up any housing units which actually exist. I'm not sure this follows. If a Seattle resident would have been willing to buy a presale (to ultimately live in), but it is instead bought by a foreign investor, then the resident has a smaller pool of housing to choose from.
    - cperciva 9y ago
      If a Seattle resident would have been willing to buy a presale (to ultimately live in), but it is instead bought by a foreign investor, then the resident has a smaller pool of housing to choose from. Only if the foreign investor holds on to the condo in question. If they sell the unit before construction is finished (which is the most common scenario), there are just as many units of housing available for local residents. The only supply being reduced is the supply of pieces of paper which entitle people to purchase units which don't exist yet.
TuringNYC 9y ago
When the upmarket gets taken by foreign money, locals have to go down market until they can find something affordable.

seanmcdirmid 9y ago

It is the $1M+ market from what I heard, and it mostly ate up the mid market. Vancouver real estate crashed for a decade when the Japanese asset bubble popped (remember you could buy a condo for $100k in the late 90s?), this is just history repeating itself.

cperciva 9y ago
If you count the number of transactions, then yes there's a lot in the mid-market range. But most of that is buying and selling presales; it doesn't affect the supply, because it's not eating up any housing units which actually exist. (In fact, there's a strong argument that this increases housing supply, since a strong presale market encourages more construction.) The real estate crash you're talking about had nothing to do with the Japanese economy; it coincided with the Hong Kong handover and an overnight 50% reduction in immigration. Keeping the supply of new homes fixed while the number of prospective new homeowners dropped dramatically had exactly the effect one would expect...
- seanmcdirmid 9y ago
  There are a lot of Chinese with Canadian citizenship who are not foreigners but are still leveraging foreign sources money in their real estate transacstions. Vancouver (and Toronto's) exposure to the Chinese asset bubble is much more pronounced then it looks even on paper. Anyways, salaries provided in those cities are nowhere near sufficient to support the real estate markets being driven right now primarily by Chinese money. It won't end well at all, it will be very predictable in hindsight. Seattle is very different. Sure, we have our share of Chinese speculation, but it is the $200k salaries driving most of the bubble. It doesn't pop until tech does.
- nodamage 9y ago
  > If you count the number of transactions, then yes there's a lot in the mid-market range. Do you have a source for this? And is it specific to Seattle? > But most of that is buying and selling presales; it doesn't affect the supply, because it's not eating up any housing units which actually exist. I'm not sure this follows. If a Seattle resident would have been willing to buy a presale (to ultimately live in), but it is instead bought by a foreign investor, then the resident has a smaller pool of housing to choose from.
  - cperciva 9y ago
    If a Seattle resident would have been willing to buy a presale (to ultimately live in), but it is instead bought by a foreign investor, then the resident has a smaller pool of housing to choose from. Only if the foreign investor holds on to the condo in question. If they sell the unit before construction is finished (which is the most common scenario), there are just as many units of housing available for local residents. The only supply being reduced is the supply of pieces of paper which entitle people to purchase units which don't exist yet.

TuringNYC 9y ago

When the upmarket gets taken by foreign money, locals have to go down market until they can find something affordable.