International Buyers, Part 2
An excerpt from Reuters:
After hitting a three-year high in July, the dollar index .DXY, which tracks the greenback against a basket of six major currencies, has fallen nearly 3.7 percent. But the dollar has kept rising against the Indian rupee, which is down 13 percent against the greenback in the last six months and recently sunk to an all-time low against it.
A stronger dollar has “absolutely curbed my appetite to buy U.S. real estate,” said Anant Bokar of Mumbai, India, who has invested in property in the San Francisco area. “I would much rather hold my money at home and look at buying here (in India) since house prices are low due to higher inventory.”
San Francisco notched an annual price gain of 24.5 percent in May, according to Standard & Poor’s/Case Schiller home price gauge, the largest rise in its 20-city index.
International investors have been backing away from San Diego as well. Karen Van Ness, owner of Ranch and Village Homes, a Coldwell Banker brokerage, said demand there has fallen over the last three months.
San Diego prices jumped over 17 percent annually in May.
“They are watching, but they are not circling as they were,” she said, referring to prospective foreign buyers. “The international buyers are a financially astute group of individuals and not necessarily fixated on any one location.”
More experts expect the dollar to strengthen in the months and years to come as the economy improves and as the Federal Reserve tapers off a bond buying program designed to fuel the economy recovery. Interest rates are also expected to rise, although that is less important to buyers paying in cash.
Michelle Meyer, senior U.S. economist at Bank of America/Merrill Lynch in New York, said declining demand from foreigners will help moderate home-price appreciation in coming years.
She sees prices up 6.5 percent in 2014, after annual price increases of more than 10 percent though May, according to S&P/Case-Shiller.