Foreign investors driving up housing prices

by Ephraim Vecina11 Feb 2016
The substantial amount of foreign capital flowing into the U.S. real estate market has proven to be a windfall for enterprising sellers, but this has also lead to a steady rise in prices that have made homes unreachable for many middle-class American households, analysts said.
In addition, observers said that investments made by foreign nationals—and by Chinese, in particular—have led to the relative devaluation of the American dollar compared to foreign currencies.
As quoted by the Financial Buzz, a Wall Street Journal report noted that a majority of the foreign investments were made in real estate situated in “safe havens” like Australia, Canada, and the United States.
Also, Chinese nationals have already transferred billions to their overseas assets, despite not being allowed by their government to make cross-border transactions worth more than $50,000. This phenomenon might be an indicator of illegal activity, and might be an omen of another bubble burst.
“This trend is a cause of concern for real estate watchers as a similar situation arose in 2007 just before the crash of 2008, when wealthy foreign buyers were purchasing expensive homes in cash,” the Financial Buzz report noted.
“In response, the US government has to shed its lackadaisical attitude towards real estate markets and curb foreigners from purchasing residential property in American cities that are for money laundering purposes,” the report added.
Figures from the National Association of Realtors placed the increase foreign real estate transactions within the U.S. in 2014 at 35 per cent over the previous year. This represented a total value of $92.2 billion.


  • by Grant P | 2/11/2016 11:35:56 AM

    The Very, Very, Very last thing this industry needs is more regulation. The government needs to keep it's self out of the free market or it will become neither. These same "experts" are the same one's that are pushing for more government intervention and regulation which in turn exacerbate the floundering economic recovery, as weak as it is.

  • by cheryl m | 2/11/2016 4:01:38 PM

    Grant P, you sound like Donald J. Trump for President, Inc. ...that horrible man, he so wrong, he's bad, those bad lobby est ... . Hold onto that very good thought Grant. Wait til Nov and we get to see how really really bad it's all going to be when Elizabeth Warren get to be Hillary's right hand man. Remember to VOTE.

  • by Andy R | 2/12/2016 11:47:41 AM

    You people just kill me. We'll see who'll be crying if Trump or Ted Cruz win the election. The economy will tank so fast you won't know what hit you. We have the real estate market we have due to fair regulation, not in spite of it. TRID hasn't hurt anyone's business except those that were trying to obfuscate information from their clients. The regulations put in place for mortgage brokers after 2008 were very successful in weeding out most of the bad players in the industry who were giving us all a bad name. The answer isn't less regulation - Helloooooo crash of 2008- it's smarter regulation. I love conservatives who somehow want to return to the Bush years from which we are just now recovering.


Is TILA-RESPA a good or bad thing long term?