Coronavirus may whack New York, California luxury real estate markets
The high-end U.S. real estate market is already sucking wind amid an inventory glut
While the luxury real estate market in the U.S. is already facing headwinds, fear stemming from the spread of the Coronavirus could exacerbate challenges.
The U.S. has suspended entry into the U.S. of foreign nationals who have visited China within the past 14 days in an attempt to stem the spread of the virus – which will likely impact the U.S. housing sector.
"You have less incentive to buy real estate if it's unclear if and when you'll get to visit the property," Realtor.com chief economist Danielle Hale said in a statement. "In the short term, the virus could dampen [luxury] sales further."
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According to data from StreetEasy, luxury prices in Manhattan during the fourth quarter of last year fell at the fastest pace since the financial crisis – amid a more than 12 percent expansion in inventory.
Meanwhile, foreign buyers were already pulling back – and Chinese purchasers comprise an important piece of that demographic. According to data from Realtor.com, Chinese buyers spent about $13.4 billion on U.S. homes from April 2018 through May 2019 – which was a 56 percent decline from the same period the year prior. As previously reported by FOX Business, during that time individuals from China still showed the highest engagement of all non-domestic buyers.
The biggest markets for non-domestic buyers were Florida, California and Texas – but New York was also a significant destination for foreign buyers.
Trade tensions between the world’s two largest economies were partially to blame for a cooling in real estate transactions, according to the report, as were tighter capital controls in China and a stronger U.S. dollar.
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But more recently, coronavirus fears have sent mortgage interest rates lower, according to Realtor.com. As of Feb. 6, Freddie Mac noted mortgage rates had fallen for the third consecutive week. That could push homebuyers into the market but also cause sellers to raise prices.
At least 12 people in the U.S. have tested positive for the virus – while the status of dozens of others is still pending. In China, there have been more than 37,000 confirmed cases of the virus since Dec. 31.
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