Bubble, Buble . . .

Latest dispatch from Southern California tells us that wealthy Chinese — that’s Chinese as in China, not your local Chinatown — are scooping up homes in the better parts of town favored by Chinese buyers. Homes in places like Arcadia, San Marino (a long-time favorite of wealthy Chinese), San Gabriel, Temple City and Walnut, are selling like hot cakes at rapidly rising prices. In parts of Arcadia prices are up 23.7% to 30.5%, and the median price is around $1.32 million. The market is apparently driven by Chinese “flight capital” — money earned in China but being spent in America, rather than remaining at risk in China’s increasingly uncertain economy. E. Scott Reckard and Andrew Khoury, Wealthy Chinese Home Buyers Boost Suburban L.A. Housing Markets, March 24, 2014 — click on http://www.latimes.com/business/la-fi-chinese-homebuyers-20140324,0,5923659.story#axzz2wtgIyIix

But whatever those buyers’ motivation, the Chinese home buying spree is having a ripple effect. This is unsurprising if you reflect on the fact that of late the Chinese have bought 12% of all U.S. homes bought by foreigners, as opposed to only 5% in 2007, the last pre-crash year. Which means that homes in desirable parts of California are becoming increasingly unaffordable to ordinary folks who, even before the Chinese buying spree, have been getting crowded out of the regular home market by well endowed cash buyers and investors. Now, add this Chinese cohort who considers these outlandish home prices to be bargains, and what you get is . . . You tell us.

This isn’t good, folks. It’s nice when your home appreciates as you age, but there is such a thing as too much of a good thing — as we should have learned in 2008.