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.
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.