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With the collapse of the Chinese stock market and the future uncertain for Chinese investment in real estate, eager buyers may look to some unlikely locales for bargains.
“Average home prices in Paris, Rome, and Milan have fallen in the last year as economic recovery has yet to take hold, according to real estate broker CBRE,” The Wall Street Journal wrote. “The average price of Paris pads was down 2.8% in the last year, CBRE data show. Homes in Rome and Milan were down 1.4% and 1%, respectively.”
How could this be? In New York City, the American counterpart to those European urban giants, prices are still at an all-time high. One possible reason: A decent-ish economy and employment rates. The Bureau of Labor Statistics released August employment numbers on Friday, showing 173,000 new jobs created. And once the numbers are revised next month, says Jonathan Smoke, chief economist of realtor.com®, that number should leap even higher.
The report, he said, “was clearly positive: The unemployment rate is down to 5.1%, the lowest level since March 2008; average hourly earnings are up 0.3% from July and up 2.2% over last year; and the broadest measure of unemployment fell to 10.3%, the lowest in eight years.”
On the other hand, such news may only make European real estate bargains look better. A stronger economy here means continued high prices, and perhaps that rate increase from the Fed will be a go. “The August employment situation report reflected continued positive growth,” Smoke said. “Enough to keep the Fed on track to increase the Federal Funds Target Rate.”
Smoke said the declining European home prices aren’t a surprise. “Europe has been struggling and is just now turning slightly positive,” he said. “Our recovery has been several years in the making, with the best year for housing in nearly a decade following much stronger economic growth that started a year ago.”
Perhaps it’s time for that Parisian pied-a-terre.
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