Monday, October 10, 2005

Bubbles Across Borders

Reporter Evelyn Iritani, of the Los Angeles Times, has a datelined story out of San Jose Del Cabo, Mexico, this morning about American investors crossing the border and inflating housing prices in Mexico, adding further fuel to the debate about whether there's a global housing bubble. Here's an excerpt:
Buyers have been snapping up homes here in the southern half of the Baja Peninsula, usually in all-cash deals ... People no longer have to be super-rich to invest in homes in foreign locales. In fact, some economists are starting to worry whether places like Baja California, London and Canada's British Columbia are part of a global housing bubble driven by the same combustible mix that has fueled American home prices: low interest rates, flexible financing and sluggish stock markets that have sent investors looking for better money-making opportunities.

Official figures aren't kept on how many Americans are buying residential real estate abroad or how many foreigners are investing in the U.S. But a survey by the National Assn. of Realtors revealed that 15% of home buyers in Florida last year were foreigners, mostly from Europe and Latin America. Three-quarters of those buyers said the properties were vacation homes or investments.

Though a similar study hasn't been done in California, economists believe foreign buyers play a significant role in the state's housing market.
Find the entire story at this link.

— The Boy in the Big Housing Bubble