November 25, 2008
"Foreign Buyers" Never Materialized And Now Tourist Dollars Decline
“The dollar’s resurgence, as well as a drop in home and stock values outside the U.S., will discourage foreign shoppers into next year as the global financial crisis intensifies, [Stifel Nicolaus & Co. analyst David Schick] said. He estimates sales will decline 8 percent at Tiffany’s Fifth Avenue store in New York in the third and fourth quarters, versus gains of 25 percent and 10 percent a year earlier.”
∙ Saks, Neiman May Slump More as Tourist Spending Slows [Bloomberg]
∙ Recap: What’s The Scoop On Foreign Investment In San Francisco? [SocketSite]
First Published: November 25, 2008 9:15 AM
Comments from "Plugged In" Readers
Thank goodness Tiffany margins can absorb that...
Posted by: Michael L. at November 25, 2008 10:10 AM
Posted by: spencer at November 25, 2008 12:50 PM
8 percent minus 25 percent is still a 17 percent gain over a year earlier.
Posted by: sf at November 25, 2008 3:26 PM
I can assure you that plenty of foreign buyers have appeared and may soon disappear if the economy continues to tank.
I speak of two classes of would-be residents: visitors from Mexico working in blue collar service roles, who managed to get mortgages despite little or fraudulent documentation, and H1B workers from India and China in white collar professional roles who stretched to buy more than safely possible on their incomes.
If jobs are lost and real estate values are considerably lower than when it was purchased, members of both groups will have no qualms defaulting on their loans and returning to their home countries.
They do not have the right to stay in the U.S. that "green cards" or citizenship confers and have very little chance of making comparable incomes in their home country.
Apart from that, even if they did, they would be left with having to service a mortgage payment for a home in the U.S. where the rental income was significantly lower than the monthly payment to the bank - while at the same time making another mortgage payment in their home country.
I can easily imagine a negative wave from foreign ownership of a different kind than realtors speak of.
Posted by: Name at November 27, 2008 10:32 AM