David Leonhadt has a fascinating piece in today's NYT on the "split" housing market:
[T]he high end of the market is surviving the slump much better than any other segment. Even as foreclosures keep rising and overall sales continue to plummet, more expensive homes have staged a bit of a comeback in recent months. They’re spending less time languishing on the market than others, and their prices appear to be holding up better. ... The upper end of the market has also been helped by an influx of well-off foreign investors whose buying power has grown with the recent decline of the dollar. Hard as this may be for an American to imagine, New York, San Francisco or Miami can now seem like a bargain, compared with London, Moscow or Sydney.
It's clear that the housing market in key cities and mega-regions has become globalized. In this sense it bears some parallels with what has happened to elite universities, where foreign students vie for top slots. The housing market in cities that are atop the world city system - like London, New York, Toronto, San Francisco, Vancouver, LA, and others in the US and around the world - has been globalized. This not only drives prices up at the top end, it puts tremendous pressure on the entire market in those areas, making them even more unaffordable for average people and even for the upper-middle class. My hunch is this problem - and the split nature of the housing market - will continue to worsen for some time.