Foreign investors drive housing-market rally
NEW YORK – The weakening dollar has caused many problems for consumers, but it may also be providing one unintended – and very welcome – benefit: a rally in the struggling housing market driven by foreign investors.
For an individual or developer trying to sell a home, interested buyers are just as likely to already have a place in London or Paris as they are to be first-timers new to the market.
“European investment is likely to pick up,” said Mark Vitner, chief economist for Charlotte, N.C.-based Wachovia Corp. “Now is the time to come over and take advantage.”
The theory goes that foreign investors step in and replace first-time home buyers who have been squeezed out of the housing market. These new investors in turn allow current homeowners to sell and trade up. That will help restart owners moving up the housing ladder, a process that had been key to economic growth in recent years.
Some mortgage brokers are already seeing a boost in inquiries about buying property from overseas. A boost in the number of home buyers would give needed relief to the beleaguered housing market.
Home-sale prices fell every month in 2007 through August and existing-home sales have declined for eight straight months, the National Association of Realtors said.
Expert say cities like Chicago and New York are already popular with foreign investors, but Sun Belt states, including California, are likely to see a surge in investment as well.
