That's a nice house. I'm not so sure about $1.8M, but it's nice. I like that shed/cottage thing. It surprises me that foreign buyers are only 5% of the market. I suppose if they own only 5% of the homes, then they could have had a much larger effect if that happened over several years. Maybe you'll get lucky and be able to take advantage of a sharp drop. Our house has more than recovered from where it was before the last crash, and yet we had a hard time getting it to appraise anywhere close to the short sale price when we bought it in 2009.
That 5% is just an estimate. My own feeling is that it is much higher, say 25%. The thing about a house like that is that it would have gone for $800K in 2010. Same for the house I live in now. My landlord bought it in 2010 for $800K and now it's at $1.7M. That's just gross.