Is There Really A Global Real Estate Market?

When I read Jonathan Smoke’s post on Realtor.com today, I suddenly thought about the Chinese stock market. He wasn’t writing about it, but I was thinking about it because Chinese real estate buyers have brought hundreds of billions of dollars into the US real estate market over the last few years. They’ve purchased prime residential and commercial properties in a variety of US markets.

Here’s the particular sentence Smoke posted, the one that got me to start thinking about Chinese, and other non-US real estate buyers: “Of course, there’s no such thing as a U.S. housing market—like politics, all real estate is local.”

Well, it’s true that a local residential markets (and even specific neighborhoods in each local area) are unique. Local real estate brokers and agents have an advantage over their peers located elsewhere, because they know their own market and geographic area. They know their typical buyers and sellers. Experienced real estate professionals know their local markets inside out, and they keep in touch with constant changes, too.

But politics is not exclusively local. Neighborhood, municipal, county, and state politics in the US are definitely affected by national and global politics. It’s undeniable, since most people follow world news on TV, radio and internet news sources, so they see local situations through a wide-angle lens.

Perhaps it’s easier to see politics from a world view than to see real estate that way. But I’m telling you about my train of thought today because I’ve learned that it’s a good idea to stand back from what I know about local real estate markets and pay attention to what’s happening in the world news. It’s a part of being a well-rounded real estate investor, and it can become a market advantage that translates into actual profit as well.

The Chinese stock market is heavily managed by the Chinese government, and that’s one reason Chinese investors have flocked to invest in US real estate for a few years now – stability. Recent news about China leads me to believe we’ll see more Chinese real estate investors here in the US in 2016, as well as managed funds including US commercial real estate holdings.

Jonathan Miller of Miller Samuel, Inc. recently blogged about conflicting forecasts published in the New York Times (Chinese investment is increasing) and the Wall Street Journal (Chinese investment is declining). Miller concludes, “The WSJ article is more orientated towards the past few weeks while the NYT article is a longer term view… The Chinese investment numbers are staggering, and they are probably understated.”

I might not have all the connections Jonathan Miller enjoys in his international real estate appraisal and consultancy firm, but I can read the signs of the times pretty well. It’s an occupational necessity for a real estate investor these days.