During a recent interview with CNBC [1], the President of Lennar International, Chris Marlin said foreign buyers are looking to the U.S. residential real estate market for long-term, stable investments.
Marlin said the consumer behavior, especially from buyers in Japan, is moving away from yield, and focused more on stability and self-use.
He added that while there has been a decline in interest from Chinese buyers in California, Chinese buyers are looking more into properties in Florida, Texas and along the East Coast. Marlin added that Chinese interest in China is still evident, but they are moving away from high-priced homes.
According to a recent Gallup poll [2], 35% of Americans believe real estate to be the superior long-term financial investment, compared to 27% who say stocks are the better investment. For real estate investors, tech such apps which allow for remote bidding could provide a quicker way to take advantage of the rising positive sentiment toward real estate as an investment.
Additionally, many current homeowners (around 1 in 10) say they would prefer going back to renting over owning, according to Gallup's research, which could be a boon for single-family rental investment.
The Wall Street Journal [3]also reported that real estate investment trusts (REIT) are growing rapidly. Real-estate investment trusts that buy residential home loans increased their mortgage-bond portfolios by almost 28% to $308 billion over the 12 months through March, the largest stockpile in six years, and according to Eisen, are poised to continue to grow as the government’s housing market role shrinks.
Though these firms are small compared to the mortgage market as a whole, the report states that some analysts express concern that they are putting more of the mortgage market into the hands of leveraged firms with minimal oversight, noting that some risky REITs went bust during the last financial crisis. However, some suggest that REITs make up an optimal backbone for the mortgage market, leveraging less risk than before the financial crisis and able to quickly raise and deploy money when they see an opportunity.
“If you want to have more private capital in the market, you need to manage the risks,” Calvin Schnure, SVP for Research and Economic Analysis at Nareit, told the Journal. “Mortgage REITs hedge all of those risks.”
Why foreign buyers invest in US residential real estate [4] from CNBC [5].