5 ms·

It is said that a big factor in the rise of property values in SF is the money coming in from China. A realtor friend of mine here in SF was narrating the tale

It is said that a big factor in the rise of property values in SF is the money coming in from China. A realtor friend of mine here in SF was narrating the tale of a house (on Pacific Heights, one of prime neighborhoods) going for sale for $2.7M, and ending up being sold for $3.5M after a bidding war... between 2 Chinese men, both of whom were in China, and were buying the property sight-unseen, all cash. http://blog.sfgate.com/ontheblock/2014/05/02/catering-to-chinese-buyers-in-san-franciscos-real-estate-market/#22929101=0 http://blog.sfgate.com/ontheblock/2014/05/02/catering-to-chi...

ChuckMcM 12y ago
I find it a bit smarmy the realtors who imply they can get your property attention from these out of the country investors. It reminds me of the old trick of the realtor showing you a picture of the buyers to enable discrimination without actually bringing it into the conversation. That said, for a number of foreign nationals buying real estate is a more durable way of expatriating wealth because it is hard to 'freeze' and it can be difficult to claw back. During the Iranian crisis there was a student at USC in my dorm whose parents were sending him money by first buying a number of houses in west LA and then funneling the rent money to him as his monthly allowance. It seemed very creative.
- ulfw 12y ago
  Wait - so they could freely send money from Iran to the US to purchase houses worth millions, but they couldn't send thousands as allowance but instead had to rely on said houses' rent? That seems weird.
  - colechristensen 12y ago
    It was possible to move money but difficult. Doing so once in a lump sum meant you wouldn't have to worry about the reliability of regular bank transfers across borders or fear your accounts being frozen once you were successful a single time. Seizing a house is much more difficult than freezing a bank account.
conistonwater 12y ago
That could be due to more robust private property protections, and the fact that China would have much more trouble confiscating property in US than cash in case of some dispute. That doesn't explain why anyone would want to bid up a specific city, though.
- discardorama 12y ago
  Apparently, the Chinese (from mainland) prefer San Francisco to other cities because SF already has a large and vibrant Chinese population, so it's easy to adjust to life here. It is also physically close to China.
  - medell 12y ago
    The same goes for Vancouver, which the article briefly mentions. A study in 2010 reported that of the 164 sales of $3M+ homes in Vancouver's West Side (richest area) and Richmond (largest chinese suburb of Vancouver), 74% went to buyers with Chinese last names. This number was 46% in 2008. Not the most scientific study for many reasons, including 2nd/3rd gen Chinese, but knowing Vancouver, that demographic doesn't intersect with the affluence much at all. This "study" wouldn't work as well in SF, but you get the point. There is a lot of yuan coming to the west coast. http://www.theglobeandmail.com/life/home-and-garden/real-estate/in-vancouver-race-undercuts-the-discussion-on-affordability/article19873510/ http://www.theglobeandmail.com/life/home-and-garden/real-est...
    - kyllo 12y ago
      The Seattle area is definitely experiencing this as well.
      - vorg 12y ago
        Sydney, Melbourne, and Auckland have had their day.
        dredwerker 12y ago
bduerst 12y ago
I've heard the same. I had some friends who were house hunting and placed six bids on homes in the peninsula, only to be out-bid at least 20% in cash over the valuation of the home each time. They ended up getting a house finally at 10% over, but only after convincing the person to close early and not list it. They claim it prevented the foreign investors from finding it.
refurb 12y ago
Don't forget that it's in a realtor's best interests to stir up the pot about all this foreign money. "Bid higher or the Chinese will outbid you!!". Apparently there was a scam in Vancouver, BC where a local realtor group was busted doing this exact thing.[1] They took a couple of their Chinese employees and had them wander around expensive homes with a story about buying up a ton of real estate. Very smarmy. And they weren't the only ones doing it. [1]http://www.cbc.ca/news/canada/british-columbia/former-mac-marketing-manager-disciplined-over-fake-chinese-buyers-1.2691528 http://www.cbc.ca/news/canada/british-columbia/former-mac-ma...
- shostack 12y ago
  Any thoughts on how to compete with that or determine if it is occurring?
  - spitfire 12y ago
    easy. Never enter a bidding war. If you show up and there's multiple cars outside, walk. If the sellers realtor says "Bring chequebook with N signed cheques for $X amount" or such, walk away. FWIW Canada is USA circa 2005-2006 right now.
    - refurb 12y ago
      Great answer. The other approach is figure out what the house is worth to you. Figure out what your max is before you start bidding and don't go above it when the bidding starts.
      - spitfire 12y ago
        Good approach. To elaborate, bid the lesser of your value or market value. Always. If you feel the least bit of pressure, or feel there's any shenanigans going on, walk away. There'a always another house to come around.
  - mikefivedeuce 12y ago
    Deeds are public record so you can always check to see if a single person/entity is buying up many properties in an area. Sites like whydontweownthis.com are making it easier to check as well.
deleted 12y ago
[deleted]

ChuckMcM 12y ago

I find it a bit smarmy the realtors who imply they can get your property attention from these out of the country investors. It reminds me of the old trick of the realtor showing you a picture of the buyers to enable discrimination without actually bringing it into the conversation. That said, for a number of foreign nationals buying real estate is a more durable way of expatriating wealth because it is hard to 'freeze' and it can be difficult to claw back. During the Iranian crisis there was a student at USC in my dorm whose parents were sending him money by first buying a number of houses in west LA and then funneling the rent money to him as his monthly allowance. It seemed very creative.

ulfw 12y ago
Wait - so they could freely send money from Iran to the US to purchase houses worth millions, but they couldn't send thousands as allowance but instead had to rely on said houses' rent? That seems weird.
- colechristensen 12y ago
  It was possible to move money but difficult. Doing so once in a lump sum meant you wouldn't have to worry about the reliability of regular bank transfers across borders or fear your accounts being frozen once you were successful a single time. Seizing a house is much more difficult than freezing a bank account.

conistonwater 12y ago

That could be due to more robust private property protections, and the fact that China would have much more trouble confiscating property in US than cash in case of some dispute. That doesn't explain why anyone would want to bid up a specific city, though.

discardorama 12y ago
Apparently, the Chinese (from mainland) prefer San Francisco to other cities because SF already has a large and vibrant Chinese population, so it's easy to adjust to life here. It is also physically close to China.
- medell 12y ago
  The same goes for Vancouver, which the article briefly mentions. A study in 2010 reported that of the 164 sales of $3M+ homes in Vancouver's West Side (richest area) and Richmond (largest chinese suburb of Vancouver), 74% went to buyers with Chinese last names. This number was 46% in 2008. Not the most scientific study for many reasons, including 2nd/3rd gen Chinese, but knowing Vancouver, that demographic doesn't intersect with the affluence much at all. This "study" wouldn't work as well in SF, but you get the point. There is a lot of yuan coming to the west coast. http://www.theglobeandmail.com/life/home-and-garden/real-estate/in-vancouver-race-undercuts-the-discussion-on-affordability/article19873510/ http://www.theglobeandmail.com/life/home-and-garden/real-est...
  - kyllo 12y ago
    The Seattle area is definitely experiencing this as well.
    - vorg 12y ago
      Sydney, Melbourne, and Auckland have had their day.
      - dredwerker 12y ago

bduerst 12y ago

I've heard the same. I had some friends who were house hunting and placed six bids on homes in the peninsula, only to be out-bid at least 20% in cash over the valuation of the home each time. They ended up getting a house finally at 10% over, but only after convincing the person to close early and not list it. They claim it prevented the foreign investors from finding it.

refurb 12y ago

Don't forget that it's in a realtor's best interests to stir up the pot about all this foreign money. "Bid higher or the Chinese will outbid you!!". Apparently there was a scam in Vancouver, BC where a local realtor group was busted doing this exact thing.[1] They took a couple of their Chinese employees and had them wander around expensive homes with a story about buying up a ton of real estate. Very smarmy. And they weren't the only ones doing it. [1]http://www.cbc.ca/news/canada/british-columbia/former-mac-marketing-manager-disciplined-over-fake-chinese-buyers-1.2691528 http://www.cbc.ca/news/canada/british-columbia/former-mac-ma...

shostack 12y ago
Any thoughts on how to compete with that or determine if it is occurring?
- spitfire 12y ago
  easy. Never enter a bidding war. If you show up and there's multiple cars outside, walk. If the sellers realtor says "Bring chequebook with N signed cheques for $X amount" or such, walk away. FWIW Canada is USA circa 2005-2006 right now.
  - refurb 12y ago
    Great answer. The other approach is figure out what the house is worth to you. Figure out what your max is before you start bidding and don't go above it when the bidding starts.
    - spitfire 12y ago
      Good approach. To elaborate, bid the lesser of your value or market value. Always. If you feel the least bit of pressure, or feel there's any shenanigans going on, walk away. There'a always another house to come around.
- mikefivedeuce 12y ago
  Deeds are public record so you can always check to see if a single person/entity is buying up many properties in an area. Sites like whydontweownthis.com are making it easier to check as well.

deleted 12y ago

[deleted]