This article is from WeChat official account:Overseas Nuggets (ID: gold1849), author: shock millet, head Figure from: vision China
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While you are still worried about whether the epidemic will rebound this year, leading to the loss of year-end bonuses and even credit cards, the middle class with assets is already calculating where to buy the next house.
The epidemic hit the economy, and the central bank released water to rescue the market. Those eligible to enter the market snowballed with cheap money, and those who were not eligible looked at the numbers in their bank accounts trembling.
This summer, mature markets with good liquidity such as the United Kingdom, the United States, Canada, and Japan have all ushered in a boom in the property market. Low interest rates contributed to this wave of global housing boom, and the stimulus continues.
People take cheap money, go to the market to find their first house, or sell their homes in the city center, and travel long distances to the suburbs to find a quiet corner.
As a result, in the United States, people find that they have “no house to buy”, but they can’t find a house with money.
This is not sensational, it is supported by real market data. According to data from the National Association of Realtors (NAR), the total housing inventory at the end of August this year totaled 1.49 million units, a decrease of 0.7% from July. Compared with 1.83 million sets in the same period last year, it dropped by 18.6%.
According to the current sales rate, it will take 3 months to consume all the unsold inventory, which is lower than 3.1 months in July and 4 months in August last year. In other words, the inventory was already low enough, but it was sold out all at once, so how can we have a choice?
In the overseas buyers’ home purchase report released by NAR every July, they always ask buyers a question:
“Why didn’t you decide to buy an American house?”
The answer with the highest proportion is always “no house to buy”, and in this year’s report, the proportion of this answer has increased to 50%. That is to say, half of overseas buyers are looking for Can’t buy a house.
There is no house to buy. It may be that the listed price is beyond the budget, the location of the house is not right, or the type of house is not right. But no matter what kind, it shows that the market is out of balance and the supply is missing.
In the United States, scarce inventory has always been a problem, but the sharp increase in timber prices in the past few months and the timber shortage caused by California wildfires have made this problem even more serious.
This naturally increases the cost of housing construction. At the same time, there is no misfire in demand and is further increasing, especially in those suburban areas that are attractive for working from home.
Housing demand is strong, but supply is not. This imbalance inevitably pushes up transaction prices.
According to NAR data, as prices in each region are rising, the median second-hand transaction price of all housing types across the United States in August reached $310,000 (Approximately 2.14 million RMB), an increase of 11.4% compared to August 2019, which is the 102nd consecutive month of year-on-year growth.
The sales growth of second-hand houses in August reached 6 million units, the highest level since December 2006.
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Behind the carnival is the historically low mortgage interest rate time and time again. According to data from Freddie Mac, the 30-year fixed mortgage interest rate fell from 3.02% in July to 2.94% in August.
However, it is not only the Native Americans who will take advantage of low interest rates.
Over the past five years, the proportion of overseas buyers who purchase US homes in full cash has decreased year by year, from 49% in 2016 to 39% in 2020.
In stark contrast, the use of US mortgage loans is increasing.
In addition to U.S. residents, overseas buyers with green cards and residence visas can also use bank loans to invest cheap money.
This group of overseas buyers plus those overseas investors in their home countries have bought 74 billion U.S. homes in the past year, with a median purchase price of $314,600 (about 2140,000 RMB), 154,000 second-hand houses were sold, and 61% of buyers had green cards or long-term residence visas.
These data come from the “U.S. Residential International Transaction Report” issued by NAR every year. I have read this report carefully and some conclusions are quite interesting.
First, the overall purchase amount has fallen by 5% from the previous year, and it has been falling for four consecutive years. This down cycle is accompanied by accelerated decoupling between China and the United States, China’s tightening of foreign exchange controls, a strong U.S. dollar, and low inventories affecting domestic and foreign buyers. At the same time, the number of second-hand houses sold fell sharply, down 16% from the previous statistical cycle.
In addition, Chinese buyers are still the largest buyers. However, among the top five buyers, China is also the only one where the total number of purchases has declined, and the number of units purchased and the average price are both falling. The decline of Chinese buyers without U.S. residency status has been the most obvious, from 40% a year ago to 30% in 2020.
Among the increase in buyers, Columbia surpassed the United Kingdom to enter the top five for the first time. But in fact, Colombia’s proportion is not high, only 1.3%.
This is also the first point I want to emphasize: Although it is declining, the source of overseas buyers investing in the United States is basically stable. China is still the first stable, with a difference of 2 billion US dollars from the second place Canada.
The second point I want to emphasize is that China is still the number one purchase price. This is because ofThe favorite area for Chinese buyers is California, where the average price is high, and the yuan is strengthening. Chinese buyers have the opportunity to buy higher-priced houses.
Moreover, compared with ten years ago, the median price for Chinese buyers to purchase US homes has increased from 320,000 to 450,000, a 40% increase in the decade.
However, it is worth noting that the purchasing power of Indians is significantly increasing, and the gap with Chinese buyers is already very small.
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Seeing that Chinese people go to California to buy more than 2.8 million yuan of houses, many people may be scared to persuade them to leave.
But there is another very important data in the NAR report, which is to compare the housing prices of metropolitan areas in the United States with major cities in the world. After reading it, you will know that American houses are not as expensive as you think.
For example, in terms of unit price per square meter, the most expensive metropolitan area in the United States, the San Jose-Santa Clara metropolitan area, is only $8,000 per square meter, which is about 56,000 yuan. If compared with major cities in the world, Can only be ranked 13th, behind Rome in Italy.
The most expensive city in the world, Hong Kong has a unit price of 28,000 US dollars per square meter, which is 3.5 times that of the San Jose metropolitan area. Shanghai ranks seventh in the world, and the unit price per square meter is 1.5 times that of the San Jose metropolitan area. The unit price per square meter of Metro Manila, the capital of the Philippines, ranks 20th among major cities in the world, but the level of US$3,952 per square meter is already half that of the San Jose metropolitan area. Is Manila expensive or San Jose cheap?
Overall, American homes are still the most attractive to Chinese buyers. They sell more and more expensive. They choose to stay in traditional settlements and popular investment locations in California, Texas, and New York, and share local financial, The spillover dividends of technological development have also met their needs for retirement, vacation, and study abroad.
The most important thing is uncertaintyIn the context of intensification, it is always valuable to purchase more US dollar assets and grasp cash flow.
This article is from WeChat official account:Overseas Nuggets (ID: gold1849), author: shock millet