This informative article from New Geography reports on the statistics.
From steamy Miami to the thriving cores of cities from New York, San Francisco, Houston and Chicago, swank towers, some of them pencil thin and all richly appointed. This surge in the luxury apartment construction has often been seen as validation of the purported massive shift of population, notably of the retired wealthy, to the inner cities. Indeed with the exception of a brief period right after the Great Recession, there was slightly greater growth in core cities than the suburbs and exurbs. It was said that we were in the midst of a massive “return to the city.”
Yet in reality the movement to the inner core has been much less spectacular than that. Indeed by 2014, growth once again was faster not only in traditional suburbs but also in the exurban areas that were broadly predicted to be the most doomed. At the same time, the fastest city growth, notes economist Jed Kolko, occurred largely in the most “suburbanized” cities, like Phoenix, San Antonio, and San Diego.
One major meme for the luxury developers had to do with well-off retirees—the one domestic population with the money to afford such housing. Newspapers have been crammed with anecdotal stories about this “trend.” Yet analysis of Census trends among seniors shows that the senior percentage share in both the inner core and older suburbs dropped between 2000 and 2010 while growing substantially in the newer suburbs and exurbs. The most recent data show these patterns continue. Since 2010 the senior population in core cities has risen by 621,000 while the numbers in suburbia have surged by 2.6 million.
So who’s buying them? It’s wealthy foreign nationals, largely as investments. In many cases these units are not really residences but pieds-a-terres for the world’s wealthy; in some markets, as many as 60 percent of units are not primary residences. But such sales are susceptible to changes in foreign economies. And today, many of these buyers must contend with slowing economies at home.
Perhaps most damaging has been the decline in many countries, such as Russia, Brazil, Argentina, Canada and some countries of the Middle East, that have been hit hard by the commodity slowdown. Most critical in many markets, particularly in California, has been the economic slow-down in China, now the largest foreign investor in U.S. real estate. In some markets, like Irvine and in Bay Area suburbs, Chinese investors have accounted for upwards of 30 percent of all buyers.
Realtors in Southern California, long a favored destination for Asian investors, report a significant slowdown in investment , particularly along the coast. In some developments, roughly half the Chinese buyers paid cash, often well over $1 million per unit. This in markets where barely 10 to 20 percent of the houses are affordable to the median income family.