Funny, I remember the RE agents claiming that foreign buyers were behind the run-up in the prior housing bubble. IMO, it’s not that the world is smaller (agents come up with the nuttiest stuff), but that it really hurts to hold cash right now, and most other asset classes are at/near highs, too. As they said during the last bubble, at least you can live in a house (unlike stocks, bonds, etc.).
One thing that tends to happen when the housing market is about to turn is that spreads between the high-end and low-end tend to compress near market bottoms and expand near market tops. That’s because the people who sold starter homes have more money to put down on move-up homes, whereas buyers at the bottom don’t have huge sums to put down. That’s why the top usually continues to go up for a while longer after the bottom has stalled, and it’s why the top of the market usually doesn’t crash quite as hard as the bottom — there is more equity at the top, along with other types of wealth that can help these owners make it through the hard times.
