Foreign Demand for US Housing Concentrated on New York City Real Estate

The falling dollar has made Manhattan
apartments an incredible value
for those that earn their salaries in foreign currencies.  Even the Canadian
Dollar is worth more than the US dollar these days.   The cheaper
it is to buy dollars, the cheaper New York apartments are for those that earn
money in yens, euros and British pounds.  The lower the price, the higher
the demand.  This foreign demand has helped support the market for New
York City apartments throughout much of last year and will continue to do so
in 2008.
All of this, however, has been in the public's eye for some time.  It
has been clear that New York City, like other major American cities, would
benefit from this increase in foreign demand.  What hasn't been obvious
until now, though, is that New York City has benefited more from foreign demand
than any other American city. 
Perhaps because it has been largely sheltered from the subprime crisis, or
perhaps because of its international allure, it seems foreign realtors are
looking to New York City for a large number of potentially high-profit investments.  The
Association of Foreign Investors in Real Estate (AFIRE) has just released their
annual survey of their members.  That study has ranked New York City the
number one city for foreign real estate investment not just in the United States,
but in the World. 
Washington D.C. is the second-highest ranked city, followed by London, Paris
and then Shanghai. 
Surprisingly, given the recent turmoil in the real estate and credit markets,
the survey also ranked the U.S. as the “most stable and secure” country
for real estate investment.  This may be, in part, because of the higher
levels of transparency in U.S. markets.  This helps prevent what economists
call “informational asymmetry,” when one side of the buyer – seller
equation – usually it's the buyer – knows less than the other. 
This combination of higher levels of transparency and the falling US dollar
may prove to be a substantial boon to the economy as a whole.
The findings of AFIRE's survey mean that, across the globe, realtors will
be be directing foreign buyers to Manhattan
apartments in greater numbers
than in years past; more so than other American city. 
Foreign demand will only increase if the dollar falls further.  Furthermore,
as the roughly million homes that are estimated to foreclose in 2008 due to subprime-related
reasons start going back on the market, much of New York City – Manhattan
especially – will look like an even safer investment in comparison to the
rest of the country.  This should further concentrate the foreign demand
for U.S. housing into the Manhattan
real estate market.