Stock Woes Won't Hurt U.S. Homes

According to a new report to be released later this week by RealtyTrac, the U.S. stock market may not be on solid ground, but homes sales are. Through the first six months of 2015, home sales were at an eight-year high and the U.S. median home price in July stood at its highest level since September 2008, according to the housing data provider. Fears of a dramatic slowdown of China’s economy, which contributed as much as half of the world’s growth in recent years, has been rattling stock markets around the globe, with the Dow Jones Industrial Average recording its largest intraday point decline ever on Monday. On Tuesday, stocks in the U.S. and Europe bounced back after China cut interest rates by a one-quarter of a percentage point. But shares in Shanghai closed 7.6% lower and the Dow ended the day about 1.3% down as investors wondered how much longer the selloff would continue. China has been a driving force in the U.S. housing market, overtaking Canada as the number one source of international homebuyers this year. In the 12 months ending March 2015, Chinese nationals spent $28.6 billion on U.S. real estate, according to the National Association of Realtors (NAR). In spite of the country’s economic struggles, China should keep its lead among foreign buyers in the U.S. Lawrence Yun, chief economist at NAR, said that historically mortgage rates have had a bigger sway over housing than the stock market. In fact, the recent plunge in shares could keep the Federal Reserve target interest rate close to zero for a longer period of time, which would in turn help more people buy homes. Yun also pointed out that China’s economy is still growing and its struggles would only lead people there to look for a safe place to park their money, and “that would be U.S. real estate.” “China will remain number one” in U.S. home sales to foreigners, Yun predicted. “For economic and political reasons, Chinese investors want to protect their wealth by diversifying their assets, buying U.S. real estate and moving money out of the country,” said William Yu, economist at UCLA Anderson Forecast, in RealtyTrac’s Housing News Report this month. This year, the Miami Association of Realtors identified China as an “emerging market” and is currently focusing on it. Lynda Fernández, senior vice president of Public Relations for the Miami Association of Realtors, doesn’t think the country’s struggles would dampen their efforts to lure Chinese buyers to Miami. “Based on our experience, when there is a downturn in a foreign market, it usually generates interest in our market, buyers and investors would find real estate attractive,” she said. Concern about China has also sent currencies in emerging markets, including the Brazilian real and the Mexican peso, to new lows this week. Still, Fernandez said that Latin Americans are still Miami-Dade County’s top clients and that has been the case during currency crises in the past. Write to Andrea López Cruzado at andrea.lopez@dowjones.com Follow Mansion Global on Facebook, Twitter and Instagram Write to us at info@mansionglobal.com