With Q3 reports fully disclosed and scrutinized, prominent analysts have come forward with optimistic predictions about the U.S. housing market. Despite the dangers of the fiscal cliff, it seems that the housing market is set to turn the corner. Numerous economic factors, including Federal Reserve policy, a declining rate of mortgage default, and a jump in home purchases, all point towards increasing health in the broader market. However, what if we’re poised to see a boom, and not merely a simmer?
According to new reporting from Bloomberg, we may well see a surge in the housing market. As disclosed by Bloomberg contributor Devin Banerjee, Norway’s $660 billion sovereign wealth fund is planning to invest $11 billion in the United States housing market. Norway’s sovereign wealth fund is currently the largest in the world, and this aggressive investment would be the first time it has yet allocated its assets towards American property holdings. As market observers may well notice, one of the best ways to determine the outlook of the housing sector is by watching directly related market behavior, and such a bold move on the part of a foreign investor could well speak volumes about future trends.
The fact that a non-American finance body is directing so much of its funds towards our housing market is an enormous vote of confidence. Homeowners within the United States are increasingly confident in our housing market, and the active participation of other nations in real estate purchase only bodes well for enduring stabilization.
What’s particularly interesting to note is how little of the mammoth wealth fund’s current assets are allocated towards real estate. As the Bloomberg article details, only 0.3% of its valued holdings current lie in property and real estate. The report directly quotes Yngve Slyngstad, chief economic officer of the Oslo-based Norges Bank Investment Management as publicly claiming, “The U.S. is the next real estate market to invest in.” Strong words, but also words put forward in tandem with intent to invest.
Norway’s Sovereign Wealth Fund is looking to primarily invest in high stability and high return properties- such as office complexes in major American cities. The nationalized investment entity is predicting to draw major yields from its American investments, an unambiguous vote of confidence in the U.S. housing market. Were the Sovereign Wealth Fund to hold true to investing the $11 billion announced, it would increase the proportion of assets held in real estate by over 50%.
How the U.S. housing sector fares on a broad scale has yet to be determined, but the mounting attention of foreign entities only bodes well for the health of the American property market. Norway’s real estate interests seem calculatedly narrow. We’ll have to keep a keen eye on the market to see whether or not these motions aid the fortune of everyday investors.