The US National Association of Realtors (NAR) told the Wall Street Journal that demand from foreign buyers is weakening as a strong U.S. dollar and rising home prices have some investors looking for other countries that offer more in terms of value.
A large number of real-estate experts predicted that foreign investors would flood the U.S. real estate market last year as they sought a safe haven from the volatile global economic. According to the WSJ, realtors reported that Chinese buyers had surpassed Canadians as the top foreign buyers of U.S. real estate in June of 2015. This trend reflected the growing interest investors had in the U.S. because they believed the country’s property market was a secure place to place their money.
However, it looks as if the trend is reserving and more foreign buyers are now avoiding investment in the U.S. market as prices in preferred cities like New York and San Francisco have increased dramatically. This issue was made worse by the strong U.S. dollar. According to research from the NAR, the median price of existing U.S. homes had increased 14 % for a buyer from China in January 2016 when compared to 12 months ago once exchanged rates have been factored in.
Another issue affecting Chinese interest in U.S. real estate is the government which is now cracking down on buyers who try to evade a USD50,000 annual limit on how much money they can transfer out of the country, the WSJ reported. Previously, Chinese buyers transferred money out of the country via friends, family member or employees but the government in China is now looking at that activity much more closely.
Lawrence Yun, NAR’s chief economist, explained to the website that it remains to be seen just how much Chinese demand for U.S. homes will fall. The country recently reported growth of more than 6 percent even in the rough economic climate. It was also noted that many Chinese residents want to diversify their investments after having lost money in the stock market which continues to struggle.
