If the Chinese Buying Spree Is Over, Why Does the U.S. Housing Affordability Crisis Persist?
"Growing distrust between the United States and China has slowed the once steady flow of Chinese cash into America," declares today's New York Times, "with Chinese investment plummeting by nearly 90 percent since President Trump took office."
If you live in a major American city, you've probably seen a lot of that investment flowing into neighborhoods around your home. So, what's going to happen to your home value now that all those investors are sitting on the sidelines? In recent research, I tackled this question for the Dialogue of Civilisations Research Institute:
For US housing, the great Chinese buying spree is over, or so it seems, for now.
After years of headlines heralding a surge of foreign investment in the United States, the trade war has finally taken its toll. Cross-border flows are retreating. In real estate in particular, Chinese investors are selling big holdings.
Not all countries are heading for the exits, mind you. (In fact, foreign purchases are near an all-time high.) But with interest rates rising and government officials scrutinising outbound investment more closely, it’s not surprising to see China receding in the rankings.
The question is, after years of blaming foreign investors for nosebleed prices, should the United States now brace itself for an abrupt return to affordability?