It says in the opening paragraph "tighter currency controls by the Chinese government". As with most financial articles there is no discussion of the relative magnitude of the effects at play. Financial journalists are perfectly happy to ignore the elephants in the room and report a laundry list of tiny effects that might have had an impact and then devote 1 line to whatever causes 80% of the change observed.
Fleeing implies they have a choice and are choosing to leave because of poor prospects in US housing. That might be true. But the choice might be involuntary or be due to sharply rising prospects in China or elsewhere. If China those capital controls are significant, maybe a better title is "Chinese purchasers dragged away from US housing kicking, screaming and cursing their own government". That is a possible interpretation based on what is included in the article.
I mean, the Canadians don't have currency controls. Neither do the Mexicans. All three of the Big Three foreign real estate buyers have pulled back in a material fashion this year.
Like I said, I just think something must be going on here. I don't think this can be waved off as "Well, it's just China."
Compared to Mexico and Canada, China's economy has changed dramatically in the past 20 years. A middle class emerged in China. Tons of wealth created. A large number of potential purchasers of foreign real estate. Mexico is today where China was at the turn of the century (when comparing GDP).
What's your source? Mexico's per capita GDP is the same as China's and Mexico's data is probably more accurate. Mexico is a middle income country and NAFTA has been transformative for Mexico in the last couple of decades.
I wasn't citing the per-capita numbers. Here's total GDP:
China, 2000: 1.2 trillion USD [0]
China, 2017: 12.2 trillion USD [0]
Mexico, 2000: 700 billion USD [1]
Mexico, 2017: 1.15 trillion USD [1]
If GDP is a proxy for wealth, China --over the past ~2 decades-- had way much more potential in investing in foreign real estate. I don't understand why per capita GDP would be more relevant in determining which nation would have more capacity in investing in foreign real estate. That capacity for investment seems independent of how the wealth is divided among a countries citizens.
"That capacity for investment seems independent of how the wealth is divided among a countries citizens."
The rest of your comment makes sense. But this last part doesn't seem right: if wealth were distributed evenly in China, then there might be no Chinese buyers for US real estate. It's only due to inequality ('how the wealth is divided') that there is a segment who can afford this.
I don't think we'd be able to infer the wealth distribution from GDP per capita, either. Total GDP tied with the Gini coefficient might tell a reasonable story. But the premise of Gini Index of 1 leaving all people too poor to invest directly in U.S. Real Estate makes sense. I'm pretty confident that China's wealth distribution is far from perfectly equal among all citizens.
"Hispanics are experiencing the largest homeownership gains of any ethnic group in the U.S., a turnaround for the population hardest hit by the housing bust that could help buoy the market for years."
> As with most financial articles there is no discussion of the relative magnitude of the effects at play.
Principal Component Analysis is really difficult to do on a live economy because no one is omniscient and policies/events enter and go in a less than ideal simultaneity.
The inability to acquire fully convertible currency means they have to leave the market. Yes, they are being forced, but the same could be said about any influence they would have to react to.
Fleeing implies they have a choice and are choosing to leave because of poor prospects in US housing. That might be true. But the choice might be involuntary or be due to sharply rising prospects in China or elsewhere. If China those capital controls are significant, maybe a better title is "Chinese purchasers dragged away from US housing kicking, screaming and cursing their own government". That is a possible interpretation based on what is included in the article.