You have likely heard: The Stock market of the world’s second-largest economy, China, fell dramatically last week by 11.5%, causing panic with global financial markets and losing nearly $10 trillion since their peak in June. Investors’ concerns over China’s economic slowdown have showed no signs of letting up. This has caused a ripple effect across world markets.
However it’s not only the stock market that has fallen in China. The government has also devalued the currency. Additionally the real estate bubble has burst and prices have had a sharp decline.
But what does this mean for the real estate market in the United States? The Chinese stock market crash and the recent fall in real estate prices have given rise to an even stronger desire to seek out investments in safer economies. They consider the hard asset of real estate as the safest. Real estate in the U.S has been looked at as a stable asset, and demand for it has been felt locally: prices in with some of our local markets have skyrocketed in the past couple of years.
However the Chinese buyers now are facing two big changes: the real estate that they sell at home is bringing them less profit and the money that they have has been devalued! The logic here is simple: China’s millionaires still seek safe investments in US Real Estate, yet they are adjusting their price point and seeking out less expensive areas and other locations besides the two coasts.
“There’s still a strong desire to buy in America, but maybe they’re not coming in with quite as strong offers,” Ken DeLeon told KCBS. Time will tell.