Trump Trade War Set To Affect Chinese Buyers Of US Real Estate
West Coast housing markets may be in for some rough times after a Chinese pullback is seen more as a possibility that a theory. According to Market Watch, analysts predicted this possibility after the trade dispute between China and the US reached a "fever point" in the past few days.
The US had continued the imposition of damaging tariffs on imports and the Chinese are doing the same in retaliation.
These concerns have already been felt in most departments in the US. The Dow Jones Industrial Average (DJIA) went down -0.05% points and the S%P 500 (SPC) went down -0.03% based on the values alone.
The rates managed to climb back up to "modest" values by Tuesday and Wednesday, but the damage has already been done.
Chinese investors have been one of the biggest purchasers in the US residential real estate. For six consecutive years, this has held true, but President Trump's trade war may change that soon enough. Add to that the efforts of the Chinese government to ease the national debt and to jump-start their slowing economy and the market may be in trouble.
The only problem is with the current situation being what it is. The US and China's ugly trade dispute has been going on for some time, and it's affected the way China's middle-class had been growing. QZ reported that the middle-class was hailed as a "cure-all" for many of the global economy's troubles due to the Chinese consumer's purchasing power, but that may not be true anymore.
In past years, it's been because the middle-class had received a lower income than they're used to. Recently, it's been because the situation pressured home prices to go up high.
Beijing and Shanghai have homes that cost just about the same amount an average family in China would earn in approximately 23 years, without buying anything.
China is prepared to answer this challenge. It is for this purpose that they had a series of policies aimed at creating a "stimulus package" to help the economy regain its status.
There is also the fact that the consumer base could eventually overcome what's been happening and clean up their finances, finally getting their spending back on track.
Still, China is the difference maker in many global markets, the US only being one of them. California isn't just the only place where these buyers could make a difference.
There's also the New York City metropolitan area, including states such as Texas and Florida, It seems that this time the US is the one who needs China more.