Popular city housing prices are global markets, not local markets. Turns out foreigners have lots of money to burn that locals can't match.

Things like http://sanfrancisco.cbslocal.com/2015/04/28/realtors-printin... and http://www.sfgate.com/business/networth/article/How-and-why-... and http://www.bloomberg.com/news/articles/2015-10-14/nyc-s-luxu... and http://www.nytimes.com/2015/02/12/nyregion/russia-time-warne... and http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign... and http://www.theguardian.com/business/2015/jul/12/chinas-rich-... etc

So basically we're paying feudal land dues to Russian oligarchs?

What happens is that in a low volume housing market, prices are determined by the activity of relatively few sellers and (wealthy) buyers. Prices can easily go up and up in a rarefied market.

In my neighborhood all the houses going up for sale are being bought sight unseen, over asking price, by investors who replace the carpet, paint the walls, then rent them out.

Yes, I've seen this too, and in Orange County (SoCal) there are houses being bought like this and then nothing is done with them at all. They just sit there. I guess you can get away with it in a climate that never freezes so no issues with the pipes bursting, etc. The owners are foreign corporations, off-shore funds, etc., and a lot of Chinese.

I think the only solution is some kind of state or national tariff on foreign purchases of property or a tax on property owners that do not reside in the state. Of course then they'd incorporate shell corps but it would at least reduce the phenomenon a bit.

Do you think this is due tonthe low interest rates? People with money in the bank are not getting anything for it. Therefore it's better to buy a house at current low rates and make it back month by month?