Image: Nick_T at http://www.flickr.com/photos/nicholas_t/
One advantage of long road trips, particularly with say… one’s spouse, is the opportunity to talk without interruption. The car moving down the highway at 75 65 miles per hour (or whatever the legal speed limit is, officer) becomes a sort of isolation chamber without TV, without the kids demanding attention, and without any other distractions.
So it was on a recent trip to San Antonio. Having left the kids home with the grandparents (truth be told, we were sort of asked to leave so they can monopolize the time with The Spawns), Mrs. Notorious and I found ourselves with all this time to talk about things and catch up. Eventually, you run out of the domestic, immediately relevant, personal topics… so being that the Missus has a MBA and some twenty years experience in fashion retail, we got to talking about business.
She raised a complaint, and an ancillary point, that I thought was interesting enough to share, especially with the audience of this blog that tends to be almost all real estate people.
She thought that the retail industry needed to “go back to basics” in a profound and fundamental way.
I agree, but it’s worth understanding what “the basics” are.
I’m in court all this week, so blogging can’t help but be light. But I did want to pass on an interesting conversation I had last night with a friend who is a Wall Street guy and a sharp reader of the economic scene.
I asked him whether inflation expectations were influencing people with money (like him) to buy real estate, a theory of mine that I wrote about over at 7DS. His answer surprised me.
He thought that inflation wasn’t the reason for the increase in cash buyers, but that foreign money seeking safe haven was. His view is that with the dollar getting more or less devalued by our Federal government policies, foreign buyers are finding bargains to be had in the United States. This MarketWatch story more or less matches up with that idea.
But the reason was fascinating. These wealthy foreigners are basically more aware of political risk in their home countries than they are economic risk of the U.S. market (in his view). For example, a Chinese businessman who has made millions from exports to the U.S. doesn’t want to repatriate those dollars back to China and entrust the money to the Chinese banking system (and no sane person would, he thought). So rather than bringing those profits home, the Chinese businessman just buys real estate in the U.S. to park the money here.
For example, he knows a custom builder in the Millburn area. Said builder put up five houses, all over $2M in price. One Chinese buyer bought three of them, in cash.
Apparently, the same goes for Europeans and South Americans. A lot of the rich are worried about political and fiscal situation in their home countries, and are seeking safety. They’re buying gold, commodities, etc. and American real estate.
This is one guy’s opinion, of course, but it’s interesting. Is there anything like this going on in your markets?