We’re back on topic with Trade War, but this time, it’s much worse. Chinese Buyers are packing up and leaving as tensions between China & the US worsen. CNBC is calling it the “Trump Effect”. Punishing Tariffs on foreign trade and commerce is costly to Chinese Buyers, and causing them to question American Assets. While vice-versa, China is putting tighter and tighter restrictions on assets leaving the country. In 2016, 46.5 Billion Dollars was invested directly into the US from Chinese Investments. In 2018, that number fell to a mere 5.4 Billion Dollars. – Rhodium Group “The Trump effect is undercutting some of the primary drivers of Chinese demand for U.S. property, including buying homes for students who are studying in the U.S. and the country’s reputation as a safe investment.” – CNBC
While this issue is not centralized to one industry, this trade war is directly affecting the real estate market and we are seeing the affect in both housing prices, inventory, and commercial properties. We are even seeing regulators forcing Chinese Investors to sell off large commercial assets due to concerns over accessibility to large amounts of American Data. Chinese buyers are the largest percentage of international buyers in US real estate, and dumping is a huge concern for lower income and rural areas in the mid-west, where Chinese Investors have been reviving industries, like Michigan or Kentucky. This is especially a concern if tensions continue with the US & China. Restrictions and regulations will only continue to make it more difficult for investors to hold onto their foreign assets.
There’s an upside to this though. If you are looking to purchase a home, now is the perfect time. Prices are low and [Chinese] sellers are eager to get their money out while they still can. Home prices are dramatically lower due to a few reasons. Prices having reached a point in the market where they have maxed out incomes (causing an adjustment period), and dumping will surely help.
For more information on Chinese and American Investments, check out the CNBC, The New York Times, and RHG’s Chinese Investment Monitor.
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