The idea that imported money will stabilize us because everyone wants to live here has so far failed to materialize.
The market of which you speak is so thinly traded that it could quadruple and our regional medians would barely reflect the effect.
Do you have any idea how few of these transactions there are? In 2005 there were a total of 504 sales in the MLS above $2,000,000 for the entire year; in 2006 that number dropped to 458 (which is a 10% decline by volume). YTD for 2007 is 154.
The reason I started out at $2,000,000 is because the price ranges below that are rife with financing terms that clearly indicate that many of those buyers in places like Carlsbad and Encinitas are not even among the almost-wealthy, let alone the super-wealthy.
Bear in mind, most of the above numbers are in the $2,000,000 – $3,000,000 range, which is hardly the realm of the superwealthy to whom you refer. The number of sales in the last 28 months above $4,000,000 only amounts to 151. When compared to the 70,000 sales of SFRs/condos that have sold during that time period, this number is so small that it’s insignificant to the RE economy as a whole, regardless of their transaction value.
Meanwhile the number of listings in these price ranges is high and going higher. There are currently 634 listings priced at or above $2,000,000. That’s 138% of the number of such sales for all of 2006. There are 162 active listings at $4,000,000, which is 257% of the total number of such sales in 2006. We have built far more of these properties in this region – with more in process – than we have grown or imported buyers for.
Simply put, many of these listings must sell at some point over the next year because they include new spec homes against which the builders are mortgaged to the hilt (there are 56 listed that were built in 2006 or 2007); they include RE moguls who are currently losing their ass because of the decline of their business interests; and because of the natural rotation in and out of wealth that normally occurs. Too much supply and not enough demand usually equals declining prices.
Simply put, I don’t see a single data point that supports the idea that there will be a windfall of imported money that will support pricing throughout the coastal region let alone the entire region over the long term. That’s not to say it couldn’t happen in the future, but it obviously isn’t going to happen during this economic cycle.