Bloomberg today called attention to waning Chinese demand for U. S. real estate, a topic that we’ve discussed thoroughly over the past month, pointing to a recent report from the National Association of Realtors which indicated a YoY decline in total sales to Chinese buyers for the first time since 2011 (see our previous post on this topic here: “The Party Is Over: Foreign Interest In US Real Estate Tumbles To 3 Year Lows”). As we previously discussed, Chinese businessmen concerned with a fragile economy and Yuan depreciation are funneling billions of dollars into high-end real estate of countries considered to be “safe-havens” like the U. S., Canada and Australia. In our view, these illegal capital flows are creating massive bubbles in high-end international real estate markets like New York, San Francisco, Vancouver and Sydney (something we discussed at length here: “Foreign Buyers Continue to Inflate Global Residential Real Estate Bubbles – This Will End Badly”). We’ve argued that when/if these illegal capital flows were curbed, these markets could be in for a rude awakening.
As pointed out in the NAR report, 71% of Chinese buyers in the U. S. real estate market pay completely with cash which just confirms the point that any success by China in curbing capital outflows will have a big impact on high-end properties in the U. S. A point which was confirmed by New York real estate broker David Wong:
This post was published at Zero Hedge on Aug 1, 2016.
Follow on Twitter
Recent Comments