Blogging Bayport Alameda

August 11, 2017

Can’t ignore the boy next door

Filed under: Alameda — Lauren Do @ 6:01 am

When the topic of the housing crisis comes up inevitably some fingers begin pointing at foreign buyers and how we need to rein that in because it’s much easier to blame an external source than look inward to see if we could have, historically, been the cause of the problem and are currently either not helping to alleviate the problem or possibly making it worse.

City Lab tackles the issue of foreign investments in US real estate, from that post:

[F]oreigners accounted for five percent of the number of units purchased, because on average they buy more expensive homes in more expensive areas than the average US buyer.

Many of these buyers, 42 percent, are “non-residents” who may indeed be leaving their properties vacant some or all of the time. But there’s another even larger population of foreign buyers that isn’t getting much attention. The lion’s share of the homes, almost 60 percent, were bought and occupied by people who reside permanently in the United States as either recent immigrants or foreigners on work, student or other visas.

And:

Foreign investment in the U.S. housing market is on the rise, to be sure. But the people who comprise this group aren’t just the owners of the “empty house next door,” according to the self-reported accounts of the realtors surveyed. They’re often our neighbors, too.

Then there’s that characterization of a whole bunch of folks from China plopping down all cash offers, but proportionately, it’s our friendly neighbors to the north that plop down those all-cash offers at the greatest percentage:

More than half of foreign buyers do fit the image of all-cash offers, but with demographics that might be surprising. More than three quarters of Canadians bought their U.S. homes in cash, compared to 65 percent of Chinese buyers and just 18 percent of Indian buyers.

The majority of these foreign buyers are actually using the homes purchased for primary residence type purposes, which makes them not interlopers into our communities, but rather — as pointed out — as our neighbors.

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14 Comments »

  1. The foreign investors are making a smart move, but its hard to deny the impact on our housing market. NPR had a story yesterday about how investors swooped down throughout the West and Southwest and South following the 2006 foreclosure crisis, and bought up thousands of 3-4 bedroom homes suitable for families, and charge the highest rents possible. These purchases were ALL CASH. The reporter suggested that this signaled the end of the American Dream of home ownership. I believe with a little digging you’ll find a good % of the “Canadians” may be immigrants from China. They are more than 40% of the Canadian -Asian population- more than 1.5 million.

    Comment by Nowyouknow — August 11, 2017 @ 6:36 am

    • File that story under: So What?

      Owners everywhere have always charged the highest rents possible. That’s not confined to the Sunbelt since ’06. As for all-cash, how would a reporter know if these purchases were all cash and why would that matter?

      But this bit really puzzles me:

      I believe with a little digging you’ll find a good % of the “Canadians” may be immigrants from China. They are more than 40% of the Canadian -Asian population- more than 1.5 million.

      Why would an owner’s ethnic or national origin matter at all?

      Comment by dave — August 11, 2017 @ 7:24 am

  2. It is our own fault for making housing a primary investment vehicle for wealth accumulation thanks to our policies and culture instead of a depreciating asset like, say, Japan. Much like Measure A, it is not surprising for a policy like this to have a kernel of rationality and be turbocharged by racism and xenophobia.
    I think a vacancy tax might be a better policy to consider (for residential and commercial spaces) to cut down on speculators. Nonetheless, they are all just policies nibbling around the edges of the real causes of the shortage.

    Comment by BMac — August 11, 2017 @ 7:26 am

    • Maybe, just maybe, an economy in its third decade of stagnation with a falling population is not one we should emulate.

      Comment by dave — August 11, 2017 @ 8:15 am

      • For most of us in this country, the economy has been stagnating for about that long. Frankly, a naturally falling population might be a plus. And Japan has a healthier population, longer life span, happier population, better sense of community and financial safety net, less violent crime, and strong middle class (aided by robust unions). So, maybe they’re on to something.

        Comment by Jack Mingo — August 11, 2017 @ 11:42 am

        • Plus there isn’t any immigration and their fertility rate is 1.4. Bottom line they’re performing self-annililation.’

          Comment by jack — August 11, 2017 @ 12:29 pm

        • Depending which measure once uses, per capita GDP is between 20-30% higher in US.

          Comment by dave — August 11, 2017 @ 12:46 pm

        • Other Jack: To use marketing jargon, they’re “right-sizing.”
          Dave: Subtracting US tax skimming of a massive military budget and the profit skimming of its richest 5%, the bulk of Japanese families are pretty contented with their standard of living.

          Comment by Jack Mingo — August 11, 2017 @ 5:09 pm

        • Mingo Jack: “Right-sizing”, I like that. Kinda like dropping a Fat Boy every year. BTW, I was in Nagasaki couple years ago and they hold no grudges. I spent many Navy days in Japan and Okinawa in the 60’s and love the culture.

          Comment by jack — August 11, 2017 @ 7:06 pm

        • Japan happier population. Must be why Japan has the world’s most popular suicide spot [recent sources say it has now surpassed the GGB] http://www.atlasobscura.com/places/aokigahara-suicide-forest

          Comment by vigi — August 12, 2017 @ 4:34 pm

  3. There have been people born in China (including Hong Kong and Taiwan) buying property in Alameda since about the beginning of Alameda. I know at least five households that have done so in the last 10 years well. None of them “hoard” or leave the properties vacant. Two live in the properties and three rent them out. I don’t know (actually – and almost by definition — nobody knows) if they rent them out at the “highest rents possible” or not, but all three are duplexes so they are subject to Alameda’s rent control law. Maybe if more anti-Chinese or greedy-Chinese-landlord sentiment makes its way into the next election (there was not much last election, but it was there) we’ll convince them to sell to someone else who might turn those duplexes back into single family houses and take them off the rental market altogether.

    It’s hard to resist looking for someone to blame, but if you’re looking for answers, I’d start with the fact that we live in a Bay Area where a lot of people, over a relatively short period of time, have moved or returned for work opportunities, and few, for obvious reasons, want to leave. Even ignoring memories of the dot-bomb and local resistance to rapid or any development of housing in the Bay Area aside (or the difficulties at Site A), and leaving aside Measure A (which does not stand in the way of major projects like….Site A), it’s difficult to imagine many places in the United States experiencing a similar short term rapid population increase without a rise in housing prices. Tokyo is not one of them.

    Comment by MP — August 11, 2017 @ 7:59 am

  4. It’s sounds like “foreign investors” is going to be like “greedy developers” in the lexicon of those who don’t want more housing to be built, somebody to vilify in order to shrug off the responsibility for housing folks through infill development. It’s quite possible foreigners with lots of cash are buying some property. It’s quite possible that there is an element of foreign investment, principally from China in operation here, especially in light of what happened in Vancouver with money from China over the last decades and, indeed, Vancouver has had to address it with a vacancy tax.

    Brian is right that the problem lies mostly in the way land value and housing is glued together to favor speculation and if we could enact policies that discourage speculation and encourage building of housing simply to house people, it would make a big difference. Vacancy taxes, land value recapture polices and perhaps a policy targeting perennially vacant lots. There’s no incentive under Prop. 13 for a landowner to develop a parcel when nearby land values go up and that could also be addressed.

    Comment by Laura Thomas — August 11, 2017 @ 8:28 am

    • Can you define a land value recapture policy? Is that more like a property tax, a capital gains tax, or something else?

      Comment by MP — August 11, 2017 @ 8:46 am

  5. Lauren. These stats are for the entire U.S., correct? You wouldn’t happen to have access to stats for Bay Area. We’re really in a rarefied environment.

    Comment by MI — August 12, 2017 @ 9:53 pm


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