World Realty Update: Is China’s Falling Stock Market Good for American Home Buyers?

The stock market in China, the second-largest economy in the world, took a nosedive last week falling 11.5 percent, causing a panic among global financial markets, and losing nearly $10 trillion since June 3. The news affected Japan's Nikkei which closed at 4.6 percent lower last week, Hong Kong's Hang Seng index closed 5.2 percent lower, and Australia's main index closed 4.1 percent lower. On Friday, S&P 500 fell 3.2 percent, Nasdaq futures fell 5 percent, and on Monday morning the Dow lost 1,000 points.

Realtor reported that in 2014, Chinese real estate investment in the U.S. exceeded $10 billion. The Epoch Times reports, "Chinese buyers have become the most aggressive foreign investors in New York City, surpassing Russians in volume and mass.'' The Epoch Times reports that the stock woes in China may benefit New York. "Interest in luxury tower apartments, as well as larger commercial real estate opportunities, is likely to even increase as China's millionaires seek safe investments and higher returns in the United States," reports Epoch Times. "The Chinese stock market crash may encourage Chinese corporations to seek higher returns in New York," said the report. 

Beijing's weak efforts to prop up the country's stock markets have collapsed. The estimated $300 billion of state-orchestrated buying has achieved nothing, and the avalanche of selling by investors forced to cover margin debt. Whether or not China's economy is weak as feared, the crisis will result to a global chain-reaction through the entire nexus of emerging markets (EM). Half the global economy has a greater threat than previous crises of the early 1980s and the late 1990s.

"We are seeing the worst of all storms for emerging market currencies," said Bernd Berg from Societe Generale, as quoted by Telegraph. "The crisis has the potential to become worse than the Asian crisis in 1997/98 as it is spreading globally. Panic selling is triggering a bloodbath among EM currencies," he said. The Asian crisis in 1998 did not lead to a global recession. The U.S. and European economies wiped it off in the end.