As the housing market recovers from its horrific crash from a few years ago, it is expected to pick up heading into the spring home buying season. But it’s not looking good to millennials as they can’t afford to buy a home.
While there are many theories as to why the majority of millennials can’t afford to move out of their parents’ homes, there are a few of them who can, but are in an unfair competition with investors, especially foreign investors who are purchasing the homes they are after, according to reports in several media outlets.
And, they say, this is leading to frustrations toward housing. Here's why.
Realtor.com Chief economist Johnathan Smoke says foreigners purchase homes in the U.S. because of the weaker economy and the stronger dollar.
According to CNN Money, Investors are most likely to snap up cheap, starter homes — the kinds of houses that millennials are most likely to be looking for and able to afford. “Home supply is diminishing but investor demand is not going away,” Lawrence Yun, chief economist for the National Association of Realtors, told the Wall Street Journal, which reported that the number of homes on the market below the $100,000 mark fell by about 11% in only a year.
According to Kerry Curry, writing for Mansion Global, International buyers accounted for 65% of all residences sold at the Marina Palms Yacht Club & Residences, a two-tower luxury condominium and marina under construction in North Miami Beach by The DevStar Group.
While San Francisco is the leading city to live in, the California housing market’s affordability crisis continues to lurk in the background as homebuyers struggle to enter the market. it is becoming more and more apparent, investor flight to the safety of real estate may be driving first time homebuyers out of the market.
According to an article in the San Francisco Business Times, “The typical San Francisco millennial can only afford to buy 135 square feet of housing, the lowest buying power in the country, according to personal finance company SmartAsset.”
It was reported in the Mansion Global that Chinese buyers are more prominent in purchasing in the U.S. real estate market.
According to Reuters authors Elizabeth Dilts and Julie Gordon, an HSBC spokesman in New York said the new policy went into effect last week, roughly a month after China suspended the Standard Chartered and the DBS Group Holdings from conducting some foreign exchange business and as Chinese authorities try to limit the amount of money leaving the country.
Because of this, China's State Administration of Foreign Exchange plans to launch a system to monitor foreign exchange businesses at banks and put people who tried to buy more foreign currency than is allowed on a watch list.
In the meantime, competition for foreign investors looks to remain solid.