Posted by Jonathan J. Miller -Monday, October 31, 2011, 12:27 PM
The USD Index tracks a basket of currencies measured against the US Dollar. The USD Index includes the currency of our trading partners including the Euro, Japanese Yen, British Pound, Canadian Dollar, Swiss Franc and Swedish Krona.
This past summer, the participation of foreign buyers seemed unusually strong. However the USD Index spiked in September and then weakened again but not to the summer lows. This may take some of the wind out of the “sales” (sorry) for foreign buyers in Q4.
There was a nice summary of the foreign buyer phenomenon last Friday in US News and World Report by Meg Handley:
Internationally oriented sales amounted to $82 billion for the year ending in March, according to the most recent data from the National Association of Realtors, about 8 percent of total U.S. sales and $16 billion more than the same period last year.
In fact, US Senator Chuck Schumer introduced a bill to incentivize foreign buyers to buy residential real estate. What I like most about the bill, is the $500k threshold since there are higher housing prices along the US coastline and FHFA reduced the conforming mortgage limits to high priced housing markets on October 1, 2011 – which are mainly on the east and west coasts.
The bill, if passed, as well as the weak US Dollar, are not the ultimate answer to the housing mess but clearly the solution is going to be comprised of many items, rather than one big idea.