- 19 Jul 2024 22:02
#15320422
I recently saw this news video.
The theme of the video is "International buyers are pulling back from U.S. housing".
They almost seem to be presenting the story as if the number of foreigners owning U.S. housing were decreasing, but if we actually pay attention to the details of the news article and give it some thought, that is not the case at all.
Rather, international buyers are just continuing to buy up more U.S. houses! Just at a slightly slower rate than in the previous couple of years.
This reminds me of how politicians phrase things when they claim to have "reduced the budget deficit" by 40%. Sure, but you're still adding onto the country's debt!
from the article:
"International buyers purchased 54,300 existing homes from April of last year (2023) to March of this year (2024).
It may sound like a lot, but that's a 36% drop from the year before.
According the National Association of Realtors, this is the lowest level of international investment since NAR began tracking it in 2009."
They present it as if it this were "international investment". International investment is usually thought of as good, of course. But is this truly "economic investment"? If foreigners are buying U.S. homes, is that really good for Americans and the U.S. economy?
I don't think it is.
Maybe if the foreigners were buying the newly constructed houses, that could fuel the construction sector, but I don't think that is mainly what is happening.
(And besides, in many of these high cost of living areas, construction of new tract homes is no longer a job Americans want to do; low-skill immigrants are being paid to build those homes, because what these construction laborers get paid is not enough to buy a house in that region of the country)
The news segment continues:
"The dollar volume, 42 billion, was also down 21% from the year before.
This as both the average and median purchase prices were the highest the NAR ever recorded for foreign buyers.
$780K Average, $475K Median "
So likely one of the reasons foreigners may be beginning to pull back is U.S. home prices are continued to increase so high.
"The top buyers by volume were Canada (13%), China (11%), Mexico (11%), India (10%).
And they bought the most in Florida (20%), Texas (13%), California (13%), and Arizona (5%)."
It should be pointed out that Florida, Texas, and California are the three main states that Americans have been wanting to move to the most. Housing prices have shot up over the last 25 years, and these three states all have housing affordability issues, due to the big population increases.
So foreigners seem to be buying up the most in the most desirable regions of the country, in the areas that have severe housing shortages.
With land being in limited supply in these areas, this seems to be more like a zero sum game, not beneficial to Americans.
"Chinese buyers spent the most money, that is, higher priced homes.
Now this report is only sales of existing homes and foreign buyers are big in the new development space, so that's not reflected here.
Realtors cite a strong U.S. dollar, as well as tight supply of U.S. homes for sale and high prices, as major hurdles to foreign buyers."
So maybe if the U.S. had not run up huge budget deficits and had so much inflation, the U.S. dollar would be even stronger right now, and it would have discouraged foreigners from buying up so many U.S. homes.
Part of this has to do with trade deficits. The U.S. has imported a lot of things from Canada, China, and Mexico. Those countries are now flush with excess U.S. dollars, so what are those countries going to do with that money? Buy up U.S. housing.
Even if those people simply put their money in a bank, it would still be drawing interest from U.S. housing, indirectly.
Since the bank takes that money and lends it to U.S. home buyers, driving up the cost of U.S. homes. It's financially equivalent to the depositor owning equity in the U.S. housing market. The homebuyer has to pay interest on the mortgage, and that interest ends up going to the person with U.S. dollars in a bank account.
This is one of the main reasons why trade deficits are bad for the U.S.
Here's why international buyers are pulling way back from the U.S. housing market , Diana Olick, CNBC - Real Estate, July 17, 2024
Foreign Homebuyers Pull Back - CNBC
Is it really such a good thing for so many foreigners to be buying up U.S. homes when the U.S. has such a bad housing shortage and many Americans are unable to afford to buy a house?
That sounds like it is just going to exacerbate the situation in the U.S. and make it worse.
two related threads that might be of interest to this discussion:
US trading away their ASSETS (in Economics & Capitalism, 29 June 2020 )
Surplus of new homes, but still a shortage of older homes (2024) ( in Economics & Capitalism, 9 July 2024 )
The theme of the video is "International buyers are pulling back from U.S. housing".
They almost seem to be presenting the story as if the number of foreigners owning U.S. housing were decreasing, but if we actually pay attention to the details of the news article and give it some thought, that is not the case at all.
Rather, international buyers are just continuing to buy up more U.S. houses! Just at a slightly slower rate than in the previous couple of years.
This reminds me of how politicians phrase things when they claim to have "reduced the budget deficit" by 40%. Sure, but you're still adding onto the country's debt!
from the article:
"International buyers purchased 54,300 existing homes from April of last year (2023) to March of this year (2024).
It may sound like a lot, but that's a 36% drop from the year before.
According the National Association of Realtors, this is the lowest level of international investment since NAR began tracking it in 2009."
They present it as if it this were "international investment". International investment is usually thought of as good, of course. But is this truly "economic investment"? If foreigners are buying U.S. homes, is that really good for Americans and the U.S. economy?
I don't think it is.
Maybe if the foreigners were buying the newly constructed houses, that could fuel the construction sector, but I don't think that is mainly what is happening.
(And besides, in many of these high cost of living areas, construction of new tract homes is no longer a job Americans want to do; low-skill immigrants are being paid to build those homes, because what these construction laborers get paid is not enough to buy a house in that region of the country)
The news segment continues:
"The dollar volume, 42 billion, was also down 21% from the year before.
This as both the average and median purchase prices were the highest the NAR ever recorded for foreign buyers.
$780K Average, $475K Median "
So likely one of the reasons foreigners may be beginning to pull back is U.S. home prices are continued to increase so high.
"The top buyers by volume were Canada (13%), China (11%), Mexico (11%), India (10%).
And they bought the most in Florida (20%), Texas (13%), California (13%), and Arizona (5%)."
It should be pointed out that Florida, Texas, and California are the three main states that Americans have been wanting to move to the most. Housing prices have shot up over the last 25 years, and these three states all have housing affordability issues, due to the big population increases.
So foreigners seem to be buying up the most in the most desirable regions of the country, in the areas that have severe housing shortages.
With land being in limited supply in these areas, this seems to be more like a zero sum game, not beneficial to Americans.
"Chinese buyers spent the most money, that is, higher priced homes.
Now this report is only sales of existing homes and foreign buyers are big in the new development space, so that's not reflected here.
Realtors cite a strong U.S. dollar, as well as tight supply of U.S. homes for sale and high prices, as major hurdles to foreign buyers."
So maybe if the U.S. had not run up huge budget deficits and had so much inflation, the U.S. dollar would be even stronger right now, and it would have discouraged foreigners from buying up so many U.S. homes.
Part of this has to do with trade deficits. The U.S. has imported a lot of things from Canada, China, and Mexico. Those countries are now flush with excess U.S. dollars, so what are those countries going to do with that money? Buy up U.S. housing.
Even if those people simply put their money in a bank, it would still be drawing interest from U.S. housing, indirectly.
Since the bank takes that money and lends it to U.S. home buyers, driving up the cost of U.S. homes. It's financially equivalent to the depositor owning equity in the U.S. housing market. The homebuyer has to pay interest on the mortgage, and that interest ends up going to the person with U.S. dollars in a bank account.
This is one of the main reasons why trade deficits are bad for the U.S.
Here's why international buyers are pulling way back from the U.S. housing market , Diana Olick, CNBC - Real Estate, July 17, 2024
Foreign Homebuyers Pull Back - CNBC
Is it really such a good thing for so many foreigners to be buying up U.S. homes when the U.S. has such a bad housing shortage and many Americans are unable to afford to buy a house?
That sounds like it is just going to exacerbate the situation in the U.S. and make it worse.
two related threads that might be of interest to this discussion:
US trading away their ASSETS (in Economics & Capitalism, 29 June 2020 )
Surplus of new homes, but still a shortage of older homes (2024) ( in Economics & Capitalism, 9 July 2024 )
Last edited by Puffer Fish on 19 Jul 2024 22:14, edited 1 time in total.
- By annatar1914