Weak Dollar props up prices?

[bruingrad]

Curious about something…

In the discussions of the looming downturn that I’ve read I haven’t seen any dicussion about the effect of the weak dollar combined with San Diego’s appeal and the possible foreign property investment

It seems to me that the dollar’s long standing weakness would help to keep prices propped up where a foreign owner would receive a substantial currency-based discount. I haven’t seen any consideration of this idea, but did read a recent NYT article about Irish investors purchasing Manhattan properties.

Any thoughts?

[blahblahblah]

This has been discussed here many times in many different threads. Unless we are invaded by hordes of Europeans, this will have a very minimal effect (if any). Remember that Europeans still have to work jobs to pay their mortgages, and that their jobs are back home in Europe. If they move to the states they’ll be paid in dollars and will be in the same boat as the rest of us. A few might move here and bring a bigger down payment because their Euros have swollen in dollar terms, but that’s a one-time-only effect.

[GoUSC]

While I agree with you CONCHO mostly, the fact is there area a significant amount of wealthy people just to the south of us that love San Diego as a vacation town and a weekend destination. They will continue to be a factor in the market. Maybe not a big one but in certain areas they will be, no doubt.

And you says the dollar is weak? Maybe it was just too strong before. Saying it’s weak assumes that it will return to prior levels. I don’t think it will.

[blahblahblah]

While I agree with you CONCHO mostly, the fact is there area a significant amount of wealthy people just to the south of us that love San Diego as a vacation town and a weekend destination. They will continue to be a factor in the market. Maybe not a big one but in certain areas they will be, no doubt.

Two problems with this argument — one, the dollar isn’t losing relative to the peso, it’s losing relative to the Euro. Two, the number of Mexican citizens who are going to fork out money for a vacation home in San Diego is very small. You’re basically talking about the old Spanish money families, the factory owners or the drug kingpins. And they’re gonna be shopping in La Jolla and Del Mar in neighborhoods that are out of reach of most of us anyway. There have been quite a few businessmen from TJ buying homes in Chula Vista and the South Bay and commuting to work — I suspect that trend is going to continue. But a dollar still buys about the same number of pesos as it used to. The same’s not true for the Euro…

[PerryChase]

I read the NYT article also.

NYC always has been a draw for Europeans. The Irish are “buying to let.” As the article cautions, the holding cost in NYC are very high ($2000/mo for maintenance is common). The buyers will soon realize that their investments don’t return, especially if the market is sliding.

Property taxes in America are very high compared to Europe.

Think $500k condo (not possible in Manhattan but OK in SD). At 6.5% interest only that’s $32,500/year. Property taxes at $6250/yr. That’s about $3200/mo. Without tax deductions, it doesn’t pencil out. As for a 2nd home, why not stay at the Sheraton when you go on vacation?

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