The price of housing in the United States has been growing exponentially in recent decades, pricing out many Americans. Those who grew up thinking that they would enjoy the same lifestyle as their parents now reach mid-career and find the real cost of housing to be double or triple what their parents faced. There are numerous reasons for that, from a rising population and decreasing amount of available land to increased institutional purchase of housing to monetary policy that seeks to drive up asset prices. But another reason that is becoming increasingly apparent is the increase in the number of foreigners purchasing real estate in the US.
For the past six years Chinese buyers have been the largest group of foreigners purchasing houses in the United States. And while many of the initial buyers were rich Chinese looking for a way to protect their millions, the trend is increasingly moving towards middle class Chinese households looking to gain a foothold in the US and protect their assets by investing in real estate.
The increased presence of Chinese buyers in the US market has undoubtedly led to upward price pressure in numerous US markets. And it can’t be terribly comforting for those looking to buy houses that they’re going to be competing against buyers from overseas, many of whom pay in cash.
That, alas, is the result of the Federal Reserve’s monetary policy of the past several decades. Those chickens are finally coming home to roost. Many people have warned over the years that Chinese accumulation of American debt wouldn’t be benign, that eventually it would come back to bite us.
US consumption patterns have relied on debt to purchase cheap Chinese manufactured goods, sending ever less valuable dollars over to China. Now those dollars are being repatriated, used by Chinese nationals to buy up tangible assets such as real estate. Maybe American consumers will wake up and realize that decades worth of cheap throwaway trinkets weren’t worth the cost of selling large portions of housing to the Chinese.
This article was originally posted on Red Tea News.
