The Chinese do not mind “overpaying” for real estate because plenty of their motivation is to just get their money out of their country.
They also distort multifamily RE pricing because it is such an embedded tradition to own RE, especially rental real estate, that when you combine those two motivations, they will pay way too much for RE based upon traditional metrics.
I can’t say I blame them. When I was involved with real estate, Chinese investors would bid up the prices of small multifam duplexes and 4-plexes to where they made no economic sense.
In a free market, buyers are free to overpay, are they not?
The Japanese investors in hotels and golf courses did the same thing in the 70s. Bridgestone took over 30 years to turn their investment in Firestone to positive.
Offshored blood money coming back to the USA making housing unaffordable for the young middle class. We will be a nation of renters which is another milepost on the march to socialism. Thanks “Free Trade”.
“In a free market, buyers are free to overpay, are they not?”
In this case it only affects the young and middle class in California who are trying to buy a house. What if in your case it affected the price of fuel, medicine or food? China floods our markets with cheap products made by underpaid workers while destroying their nation’s environment. When the sh!t hits the fan they will just move over here.
So what was the gnawing tooth that destroyed the value of their dollars in China, that would motivate them to take such a hit just to move those dollars into Stateside real estate?
Was their motivation really economic? What was their deal? Who was making the rules, that said "move your savings to the States ... and follow them there"? Why not just buy US REITs on Hong Kong markets?