FUNDAMENTALS
LOCATION
Where to Invest?
WHY INVESTORS ANYWHERE SHOULD STAY WITH U.S. REAL ESTATE
by Don Wenner
No country in the world receives more foreign direct investment (FDI) than the United States. In 2019, the USA received $251 billion in FDI, according to United Nations data. The second was China, with $140 billion. Of that $251 billion that flowed into America, $78 billion, or 31 percent, went to real estate from April 2018 through March 2019. If we look back over the last decade, we see continuous high levels of foreign investment in U.S. housing.
The COVID-19 pandemic has battered the U.S. econo- my, trade tensions pose ongoing risks, and social rest has created uncertainties around our future. Naturally, given what has happened this year, there has been a decline in foreign investment. Yet it all appears to be a momentary blip. After all, the American economy is battle-tested. When the housing market crashed in 2008, we came out stron- ger and had a historic bull run. History should provide investors with confidence that the American real estate market will remain stable and strong over the long run. Of course, they have to be more strategic about how they invest, given the current situation. ALITTLE BACKGROUND From April 2019 through March 2020, international investors bought 154,000 homes in the U.S., spending a total of $74 billion. Despite trade war tensions and the beginnings of the Coronavirus pandemic, overseas investments held up, only declining five percent from the previous 12 months. As the COVID-19 pandemic carries on, it would seem America has lost the edge as a secure destination for overseas capital. The economy did contract 34.3 percent in the 2nd quarter, the biggest decline on record, accord- ing to data from the Bureau of Economic Analysis.
What data like this tells us is: American real estate has been one of the most preferred worldwide investments. But is that still true?
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