Declining U.S Real Estate Prices Attract International Buyers

In a globalized economy, we can import cheap products from China. We can also sell our assets to foreigners. U.S real estate is bought on the international market . Driving and Walking around West LA, I have wondered how much of high local home prices are caused by "international money"? Urban economists who have discussed U.S "Superstar Cities" have focused on where the U.S rich want to live and the consequences of the skewing of the U.S income distribution (i.e that the domestic rich are bidding against each other for scarce nice real estate on the coasts and this drives up prices). But, this argument ignores international demand. The international elite may further drive up prices if they have the same ranking of "nice places" as the domestic Don Trumps. Given that we all agree that West LA is paradise, this is good news for us land owners here.

I have wanted to write a paper on how exchange rate dynamics affect Big City real estate demand. If the Yen appreciates relative to the dollar, do Japanese investors visit LA looking for bargains? In an open system of cities as the dollar depreciates, would we see International buyers over-represented among new buyers?