Real estate buyers from countries such as China, Russia, Canada and Brazil have poured hundreds of millions of dollars into New York real estate over the last few years, but evidence is mounting that that flow is slowing down.Foreign demand for U.S. properties is set to diminish, under pressure from high prices and a strong dollar, according to the National Association of Realtors, the Wall Street Journal reported.
Prices for high-end properties have risen steadily since around 2012 when the real estate market hit bottom, recently rising to record highs, partly fueled by the influx of foreign investment.
The strong dollar has made properties in cities such as New York, Miami and Los Angeles, where foreign buying has been concentrated, significantly more expensive. Median prices for existing homes in the U.S. have risen by 67 percent for Brazilian buyers over the past year, for example, the Journal reported, citing NAR. Prices have climbed 27 percent for Canadian buyers — and 14 percent for Chinese buyers.
Chinese demand is likely to diminish less severely than other countries’, NAR’s chief economist Lawrence Yun told the Journal, because while Chinese economic growth has slowed over the last year or two, the country’s GDP is nonetheless expanding at about 6 percent a year.
NAR determines the level of foreign demand by surveying real estate brokers across the country. The results of this year’s survey will be released in early summer. [WSJ] – Ariel Stulberg