China syndrome

After reading all the blogs and news reports about the Chinese businessman/official who wants to buy up a sizable piece of realestate near Sandir, I suppose I was extra sensitive to a news item that I heard last night about realestate here in California. 

California was very badly hit by the recession, especially because so much of our economy is in realestate. So I had been curious why housing prices have not fallen more dramatically; 9-12% unemployment should have brought it down a notch or two. But nope, it is still as ridiculous as ever. $450,000 for a tiny house in a run-down neighborhood, an absolutely impossible sum to save up for. So one has no choice but to take a huge loan from the bank or rent the rest of one's life.  

Anyhow, after the crash there were not so many people willing to buy homes, especially homes worth more than 1 million dollars. 

But last night I found out that the clever realestate agents and bankers in California, and in other parts of the US, did not take this predicament as a sign that they needed to lower housing costs. Oh no, that would not only cut into their salaries, which are a percentage of sale costs, but would lead to a cascade effect where all houses would start going down in price. This is of course the upside to a recession, and something, frankly, the rest of us were looking forward to. I actually thought I might be able to afford to buy a house someday. 

But the realestate agents and loan officers were not willing to let that happen. Nope, they cleverly realized that although no one in the U.S. had money, plenty of people in China did. The news interviewed a well-dressed woman here in California who speaks English with a very heavy Chinese accent, explaining how ever since the crash she has been able to get lots of "foreign investors". Then another good looking gentleman with a Spanish accent explained that the pool of foreign investors was starting to dry up, so now they were so pleased the US government was going to offer residence visas to anyone who can buy a home worth more than $500,000. The report made it clear these were not work visas, just residence visas, and the realestate agent claimed the purpose was just so investors could "see the property they are buying." Finally, they interviewed a white broker who seemed very nervous, explaining what a good thing this is for the economy, because it ensures prices stay high, and that is good for everyone, he stuttered. 

Right, everyone but the rest of us.