[quote=joec][quote=CA renter]But this is only true if the people who buy these places never plan to sell or rent to the local people at some point in the future. If they are speculating on rising rents or prices, then it’s a bubble, IMHO. It might take a while to pop, but chances are pretty good that prices cannot stay out of whack forever.[/quote]
Not sure how representative this is, but 2 Asian families close to me are renting out their houses and haven’t sold…Growing up, my dad also nearly always just bought and held renting the properties out.
I think “Asians” in general trust real estate more than stocks/bonds/financial advisers, etc…so they are more likely to buy and hold for their kids, use as a vacation home, possibly use in case they have to leave China/Taiwan, etc…
Some of the other Asian people here can voice their opinion, but I don’t think all the Asians with how they pool their money tend to sell as quick in general…
People who held in areas like the bay area/cupertino/la are sitting pretty well.[/quote]
Right, but are they renting to locals, or to other foreigners who are coming in with money from somewhere else? Someone who bought cash can accept lower rents than a LL who is maxed out on the mortgage because the mortgaged LL could easily be underwater every month on his “investment,” especially if rents go south or some major repairs are required.
The Chinese family who bought with cash can accept a 3% return, and that might be just fine for as long as all other investments, especially “risk-free” bonds, are yielding practically nothing. But how long would they be willing and able to hang on if 10-year US Treasuries are yielding 6% or 7%, or more? And what if rents go down at the same time, and they’ve had a few bad apples as tenants? What would you do?
