What Does the Chinese Market Mean to US Real Estate?

What Does the Chinese Market Mean to US Real Estate?

The global market has huge reach. A piece of political turmoil in one country, especially when it includes finance or banking, can have a ripple effect that spans the globe – shaking confidence, making people nervous about investments, altering interest rates, and more.

More recently, the world has had its eye on the Chinese stock market based in Shanghai. As the turbulent Chinese market changes and leaves investors feeling less secure about local real estate, Chinese investors are looking to the United States instead. In terms of real estate, a slump in the Chinese market means a boom in US real estate sales.

Go figure.

According to CNBC, “Chinese buyers have poured $28.6 billion into US real estate in the past year…” This is a huge number, and forecasters expect to see further increase. While California has always been a favorite for foreign investors, Florida and Texas are also favored because of educational and work opportunities.

Why real estate? The Chinese yuan and the US dollar have a very close relationship, so turmoil doesn’t necessarily mean a huge change in exchange rates, though some devaluation has been seen very recently. Real estate is considered a safe asset to have as part of an investment portfolio. The risk is considered low to moderate and the returns are generally pretty high, especially in the past several weeks.

The surge in Chinese purchases in the US started before August’s major stock exchange crash, but the impact of the crash has had a significant impact. According to Inman, “The Chinese stock market has lost 30 percent of its value and continues to see major swings,” and “More than half of Chinese citizens are considering buying foreign real estate.”

There are some analysts who wonder if the stock market crash will scare investors away from all avenues of investment, startling them into saving instead of making purchases anywhere – in China or overseas. Most seem to think that investors will continue spending in other countries, particularly in the West.

What does it mean right now? As a real estate agent, it means you need to embrace the opportunity to work with new clients. Focus on today and on your ability to appeal to a new, growing audience. We’ll keep an eye on the stock market and continue to be aware of day-to-day changes and their impacts on the global economy.