I’ve been following closely the recent attempts by the domestic oligarchy in charge of the corporatist-facist state we call America to create a new housing bubble for several years now. For a little while, I was merely confused as to how prices were starting to rise when college graduates have no jobs and are six figures in debt, while at the same time real incomes are dropping for the rest of the populace. Rather quickly, the pieces starting falling into place. It became clear that the primary demand in the market was not from new families or recent college grads. Nope, it was pretty much all financial oligarchs with private equity firms buying up properties in bulk as “investments.” An entire asset class of “buy to rent” was born. I tweeted the following a few days ago:
I can sum up the housing market like this. Rich baby boomers with PE firms outbidding each other as they enter the dementia phase of their lives.
I firmly believe that the above statement sums up what is now the primary backbone of the latest housing bubble. Alas, there is more. On top of these boomers that know nothing other than real estate and financial speculation, there is a flood of foreign money, in many cases criminal money, being laundered into U.S. real estate. We discover that this foreign cash is now preventing regular citizens from buying or even renting in the San Francisco Bay Area. From Mercury News:
Many homes that would be purchased in a normal market by average buyers are ending up in the hands of cash-paying absentee owners, typically investors, according to the real estate information company DataQuick. That’s especially true of foreclosures and lower-priced homes and condos.
David Yang, 36, who works in solar power, is moving into a home in South San Jose — the 10th one he bid on in five months of looking. “Every house in a good neighborhood probably will receive 20 to 30 offers,” he said. “It’s really crazy.”
His agent, Sharmila Banerjee, said that “cash is coming from China, India, Russia, but there can be difficulties transferring money from outside the country.” When one such deal fell through, another one of her clients had his offer accepted, she said.
In February, 1,044 houses and condos — 28 percent of the sales — in the counties of Santa Clara, San Mateo, Alameda and Contra Costa were bought by absentee buyers. That is the highest percentage since DataQuick began tracking them in 2000. In Contra Costa County, absentee buyers were 35 percent of the sales.
Real estate agent Melissa Haugh said everyone in her office was stunned at the price, paid in cash, for a Santa Clara fixer-upper.
“The house had a rat infestation, there were holes in the walls, windows that leaked, mold around windows, water damage to floors. It needed $100,000 in work,” she said.