Housing: How A Stronger Dollar Is Influencing Foreign Buyers

Takeaway: A stronger dollar matters in the housing market because foreign demand makes up ~4% of total transaction volume and ~8% of dollar volume.

Editor's Note: Below is an excerpt from an institutional research note written last week by Hedgeye Housing analysts Josh Steiner and Christian Drake. To access our Housing team's institutional research email sales@hedgeye.com.

 

Housing: How A Stronger Dollar Is Influencing Foreign Buyers - Dollar cartoon 03.09.2015

 

According to the National Association of Realtors, International Homebuyers purchased $103bn of US real estate from April 2015 through March 2016. Five countries: China, Canada, India, The United Kingdom and Mexico accounted for 51% or $52.8bn. China was the largest buyer for the second year in a row, accounting for 27% or $27.5bn of all foreign home purchases during the survey period.

 

  • Foreign Buyer residential home purchases were up +3% YoY to 214,900 units
  • Foreign Buyer dollar volumes were down -1.3% YoY to $102.6B
  • Sales Volumes to non-resident foreigners fell -11% YoY to 88.5K
  • Dollar Volume of non-resident purchases fell -18.5% YoY to $44B
  • 50% of International Buyer residential home purchases were paid in all cash
  • Foreign Buyers paid on average 56% more for an Existing Home than Domestic Buyers

Strong Dollar Impact

The U.S. Dollar is up 23% since July 2014 and, while gains have been more muted over the 12 months, currency headwinds continue to pressure purchasing power across key demand countries.  

 

As shown in the chart below, the Strong Dollar has increased the Median Price of US Existing Homes in the local countries of the Top 5 countries anywhere from 10% to 22% YoY.

 

Housing: How A Stronger Dollar Is Influencing Foreign Buyers - housing josh

 

For more information on our institutional research email sales@hedgeye.com.


Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more