The "yellow peril" theory that Bay Area housing bubbles are caused by foreign money laundering is popular on Nextdoor but I think on HN you're going to need some evidence. Prior to this pandemic 97% of dwellings in San Francisco were physically occupied by actual living people. Nobody is parking money in empty SF condos.
It's true that investors are attracted to Bay Area real estate, because the government has dedicated itself to making real property have outrageous risk-free returns, but putting "foreign" in front of "investors" is just baseless. Go look at the press release from when Dinerstein bought several large apartment buildings in Berkeley a year ago. Why did they do it? Quoting the buyer, they wanted to be "in a market that has historically had a very high barrier to entry.” In other words, in a market where the government is too stupid to build houses. This has nothing to do with money laundering.
1) 'Occupation' less of an issue, it's 'Ownership'. Foreign owners can rent homes out. Though it's such a problem in Vancouver, they are now taxing empty homes for precisely this reason [1]. Maybe SF should follow suit.
2) That foreign ownership is a primary factor in the rise of home prices in SF, Van, Toronto is completely unambiguous. There's plenty of evidence. The degree of impact is still debatable, but not that it's a major influence. [2]
From those articles you can see the type of demand is 'inelastic' - this is key to understand because it's not just 'a few more buyers'. 2-8% foreign ownership wouldn't mean much at all if they represented the 'same type of buyer' as local buyers. It would be just a small nudge in demand. But the terms they are seeking are completely different and the inelasticity is what makes their kind of demand potent.
3) 'Yellow Peril' (?!?) holy camole. There are foreign buyers from all over the world, it's a big place.
4) This is not just an SF phenom. New Zealand has banned foreign ownership [3]
The problem with your thesis is "foreign" is a throwaway word that doesn't serve any non-inflammatory purpose. It is just as relevant that investors from Texas or Delaware are buying real estate, or, for that matter, SF landlords who live in Orinda.
There just aren't a ton of Texans looking to buy up property in SF because 1) inequality, much as we may not think it's good in the US, is actually not that extreme and 2) places with extreme inequality and hyper concentrations of wealth tend to also be very corrupt places where private capital is likely to take flight.
The 'non resident buyers' in SF/Van/Toronto are going to be from China, India, Russia, some other places like that, not Texas.
Obviously, it takes on different characteristics, depending on.
Florida is a domestic getaway and retirement spot for Americans, so it's a different kind of place.
Non high-growth places like Van and Toronto have large foreign populations which act as points of entry. Chicago, Montreal, Portland ... do not.
SF/Valley has a very unique characteristic of IPO Winners and 'local super high net worth' individuals that's hard to factor - and of course, it's not NY with the possibility of rapid expansion.
> There just aren't a ton of Texans looking to buy up property in SF
I mean, are we just ignoring REITs for the purposes of this thread? TPG and Dinerstein and other domestic interests (I only chose these two because they are from Texas, to directly address your point) have dumped tens of billions of dollars into SF property holdings.
No one said they have to be empty for foreign real estate investment to be a problem. Especially when you have you foreign nationals and companies making it harder for your local residents to buy property and prosper. I think something like Vancouver’s, “ Foreign Buyers Tax (which) applies to foreign national, a foreign corporation, or taxable trustee buying a residential property in BC. BC Foreign Buyers Tax rate is 20% of the property's fair market value after February 21, 2018.” Is a fair comprise to allow people who have no local ties to invest in the market but allows the residents and those with local ties (those who will add money to local economy, shop/ eat local) a better shot then those who just want to invest.
Chinese has had a huge influence on markets like Vancouver BC. In the USA west coast, tech jobs are much more of a factor, though many of those techies happen to be Chinese (but many are also Indian, American, Russian, and so on...).
My aunt in West Seattle had people make unsolicited bids for her house (that wasn’t in the market), but these people were Indian (and they could have as easily been Chinese, Russian, American, etc...).
A guy rang my doorbell in Oakland and brandished a bank check for well over a million dollars to buy my house. He was a white American, though, so I don't get to build an awkward racist narrative around that event, I guess.
People come from different parts of the world, different things are happening in different places, it means Americans may be more likely to be out and about doing one thing, the French another, the Chinese another.
That there are 'differences' in are world is the uniquely qualifying aspect of diversity itself. 'Diversity' is not 'racist'.
It's true that investors are attracted to Bay Area real estate, because the government has dedicated itself to making real property have outrageous risk-free returns, but putting "foreign" in front of "investors" is just baseless. Go look at the press release from when Dinerstein bought several large apartment buildings in Berkeley a year ago. Why did they do it? Quoting the buyer, they wanted to be "in a market that has historically had a very high barrier to entry.” In other words, in a market where the government is too stupid to build houses. This has nothing to do with money laundering.