Foreigners have been making the sad, broken housing market feel better for a little while now—taking her to the movies, telling her how great she looks, buoying her confidence after the fiasco of the housing market crash.
But now those foreign buyers may be going away, writes a Trulia economist in a Forbes column. It was just a fling, and the housing market knew that sooner or later they would have to move on, that a healthy relationship would have to be forged with people who call the United States their primary residence. But still…
Forbes reports that foreign searches on Trulia fell by nearly 10 percent during the last year. Although all traffic is increasing on the home listing site, foreign searches make up a smaller percentage of those searches. The stronger the U.S. housing market gets, and the more prices rise, the less interested foreign buyers are, according to Forbes.
“Cheap U.S. housing may look like a good investment from afar, but American real estate prices have stopped falling in the past year. After years of declines, asking prices rose nationally 0.3% year-over-year in June,” reports Forbes.
Hey, sometimes we outgrow relationships.
Of course, as with so many economic reports, it’s one data set against another, one economist’s interpretation against the next. Why, just last month, The Wall Street Journal reported that foreign buyers were still totally in love with us.
“International buyers accounted for $82.5 billion, or 8.9%, of the $928 billion spent on residential real estate in the 12-month period that ended in March,” The Journal wrote, citing figures the National Association of Realtors. “That was up 24% from $66.4 billion in the previous-year period.”
Maybe foreign buyers just fell out of love with Trulia? There are, of course, an explanation that could reconcile these two views. Foreign buyers are basically interested in our real estate for one of two reasons—they want to take advantage of the relatively low prices following the crash, betting on the fact that real estate values will rise and their investments will pay off or they’re really rich and want a place to keep their cash safe, especially those with political or financial uncertainties in their home countries. Ahem, Russians.
It would make sense that, as the market rebounds and housing prices rise, investment properties for the upper middle classes would lose some of their appeal. But the New York housing market—a good investment if an expensive one—does not look likely to suffer in any event. Unlike a Nevada exurb, she can always find a date.