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Keith Jurow seems to think that the widespread arrival of all-cash buyers in the housing market is an ominous development:

Right after Labor Day, I spoke with a San Francisco all-cash investor who had purchased 25 properties in three western states since 2001. Having purchased two of them since early 2010, he was clearly not concerned about falling prices. In our conversation, he pointed out that had he not paid in cash, the properties might be throwing off a tiny positive cash flow. I wonder whether he realizes how much his properties had declined in value since the time of purchase. . . .

[M]any foreigners have been investing in residential properties in major metros such as Phoenix, Miami, and Las Vegas. . . .

What is less known is that large numbers of older Americans have been reluctantly drawn into real estate investing. The negative impact that the plunge in interest rates has had on the incomes of these savers has compelled them to look for higher rates of return.

Am confused. If all-cash purchasers can own properties and rent them at a substantial profit (which they can do in many depressed markets) then no wonder they’re “clearly not concerned about falling prices.” Why should they be? They’re already making money! If I own an asset with a positive carry, I’m not going to worry a whole lot If the asset declines in price in the short-term or even the intermediate-term. Sooner or later home prices will bottom and move higher. If Jurow doesn’t think that’s going to happen, he ought to be worried about a lot more than the plight of small-scale resi-real estate investors. . . . P.S. Investment by foreigners is exactly the sort of incremental demand that helps stabilizes prices, right? It’s a good thing, not a bad thing.