We have long suggested that foreign buyers of Vancouver RE are largely unsophisticated momentum driven speculators, who, along with similarly unsophisticated local specs, will be prone to dumping their RE holdings when prices head south. ‘No Money Down’ at vancouvercondo.info 25 Mar 2011 9:09am pointed to a 2006 San Diego Professor Piggington post on the phenomenon; so pertinent to the Vancouver RE market today that we reproduce it here :
The Dumb Money
Rich Toscano December 20, 2006 – 8:45pm piggington.com
One argument I hear a lot is that foreign demand for local real estate has grown substantially in recent years, and that such foreign demand will be supportive of prices in the future.
Unfortunately, this argument puts the cart squarely in front of the horse. Investors from other countries are well known to be the very last participants to arrive at the scene of a financial bubble. They are the last to hear about all the riches to be made, the last to buy in, and the last to realize that the party is over.