Displaying items by tag: outflows

(Miami)

Bad news continues to mount in the real estate market. While commercial real estate is seeing big players move out as prices are rich and inventory plentiful, residential real estate has been healthier but is just showing the first signs of strain, with inventories rising and home sales dropping. Now, more bad news. New data shows that foreign investment in US real estate is dropping quickly. In the year ended in March, sales of US homes to international buyers dropped 21% to $121 bn, the biggest ever annual drop. The drop will mostly affect high-priced US destinations like New York, San Francisco, and Miami, where foreign buyers account for a much larger percentage of the overall market, especially at the high end.

FINSUM: The bad news is starting to pile up for real estate. One wonders how a downturn might play out. Given that lending for residential real estate has been modest compared to pre-Crisis, we don’t expect this to be a grave correction.

(New York)

Anyone on the lookout for signs of a correction might want to pay attention to this. New data shows that US investors are avoiding US stock funds. Of the $4.1 bn poured into mutual funds and ETFs in the week ending December 27th, around 70% of the money flowed overseas. The trend is nothing new though, as US stock funds saw their third straight year of net outflows despite the market rising strongly. Taxable bond funds and international stock funds have seen 56 straight weeks of inflows.

FINSUM: We don’t think this is a warning sign of anything other than good times to come. US investors tend to put more money overseas when they are bullish, so this is not a negative sign.