By now, we’ve all heard about the stock market bubble that has popped in China. Over the past few years, Chinese investors have continued to pump more and more money into stocks despite poor economic growth and company profits within the country, which is never a good combination.
On June 12, that bubble popped, and over the next couple of weeks we saw the Shanghai Composite index collapse (to the tune of a 32.1% loss of value over a 17-day span). Investors both in China and around the world are understandably concerned. Many have since turned to other investment options, specifically American real estate—and even more specifically, Texas real estate.
China’s Stock Market Crash Is Good for Texas
Since China’s bubble burst, Texas has seen huge demand in real estate by Chinese buyers, which can be attributed to more affordable housing. In fact, the cost of housing in Texas averages about 72% of the average cost throughout the United States. Just in the past year, Chinese buyers have pumped $28.6 billion into real estate in this country, and Texas ranks third among all states in terms of demand.
The unpredictability of the Chinese stock market could actually be a very good sign for the real estate industry in the United States. As Svenja Gudell, who is the director of economic research at Zillow, pointed out, “Investors in Chinese equity markets will flee to safe assets, and few assets offer the combination of relatively modest risk and high returns as U.S. real estate.”
What This Means for Real Estate Investors in Houston
As we have mentioned before, the real estate numbers for Houston in the month of June were particularly impressive. In fact, home prices are looking at record highs in the Houston area. And with the expected increased demand from Chinese investors, we could be looking at even better numbers in the upcoming months. It continues to be a great time to invest in real estate here in Houston!