(This is an excerpt from an article I originally published on Seeking Alpha on July 14, 2015. Click here to read the entire piece.)
There are plenty of reasons to worry about the U.S. housing market. I am not adding China’s recent market turmoil to the list.
In a piece called “Will China flee or flood U.S. housing?“, the Nightly Business Report (NBR) last week provided a short discussion weighing different scenarios for China’s potential impact on U.S. housing. The big number is $29B: the amount of money Chinese nationals invested in U.S. housing in the past year. {snip}
NBR’s report was based on the June, 2015 release of the National Association of Realtor’s (NAR) annual Profile of International Home Buying Activity. {snip}
Source: The National Association of Realtors
Sales to international buyers were just 8% of total existing-home sales dollar volume. {snip}
Another more interesting consideration is the U.S.’s competition with other favorite spots for Chinese real estate buyers: Australia, Canada, and the UK. {snip} The U.S. is still the #1 spot for Chinese buyers, but if the U.S. market loses out, it will likely be only on a relative basis in an overall flight to safety and value.
Perhaps the Chinese government should worry more about the economic choices of its wealthiest citizens than the destinations for their money. This stat quoted by The Guardian is quite telling:
“Since 2000, China has had the world’s largest outflow of high-net-worth individuals. Around 91,000 wealthy Chinese sought second citizenship between 2000 and 2014, according to a report by residence investment broker Lion Global, a factor that is fuelling demand to buy foreign property.”
This flight supports the implicit conclusion in the NBR piece that the more likely impact of China’s financial turmoil is an increase in interest in U.S. real estate, not a decline.
{snip}
Source: FreeStockCharts.com
Be careful out there!
Full disclosure: long ITB, FXC
(This is an excerpt from an article I originally published on Seeking Alpha on July 14, 2015. Click here to read the entire piece.)