Economy Watch: Foreign Buyers, Farmland and Mortgage Disclosure

Americans might not be buying U.S. houses like they used to, but foreign buyers are in the market with both hands, according to a survey. Plus, Shiller lauds farmland, and the Consumer Financial Protection Bureau releases proposed mortgage disclosure forms.

Americans might not be buying U.S. houses like they used to, but foreign buyers are in the market with both hands, according to a survey released by the National Association of Realtors on Wednesday. The survey, called the “2011 Profile of International Home Buying Activity,” said that total residential sales to international buyers in the United States for the 12 months ending March 2011 totaled $82 billion, up from $66 billion during the same period a year earlier.

The category “international residential sales” includes both recent immigrants and non-resident foreigners, which split the $82 billion total about evenly. As a gauge for comparison, the entire U.S. residential sales total for the 12 months ending in the first quarter of 2011 was $1.07 trillion, so foreigners represented roughly 8 percent of the entire market.

Why are they still interested, considering all the prognostications of U.S. decline? Perhaps the buyers aren’t persuaded that decline is inevitable or even likely; certainly, in the case of immigrants, they’re not only voting with their feet for the United States as a desirable place to live, but voting with their pocketbooks in a serious way. Also, the depressed state of the housing market, coupled with the weak dollar, means that the choice of U.S. residential properties is high, while the prices are low.

Shiller Says Green Acres the Place to Be

What’s a good play for investors in the coming decade? According to Robert Shiller of the Case-Shiller index as well as Yale University, the answer is not residential properties or even commercial structures. It’s farmland.

Speaking at the Investment Management Consultants Association’s annual conference in Las Vegas earlier this week, Shiller said that equities won’t deliver much more than 2 to 3 percent returns annually throughout the 2010s. Farmland is another matter, however. For one thing, farmland hasn’t participated in the contraction of property values so manifest after 2007 among residential and commercial real estate, but it did enjoy some of the run-up in valuation before that.

“My only bullish call is farmland,” the Yale economics professor told the audience. The reason, he posited, is fairly straightforward economics: There is a limited supply of farmland but steady demand.

New Mortgage Disclosure Forms Cooked Up by New Consumer Bureau

The new Consumer Financial Protection Bureau took a shot across the bow of the mortgage industry on Wednesday with its release of two proposed simplified mortgage disclosure forms—two pages whose purpose is to help consumers understand such mortgage features as interest rates, payments and other important information, all in a standardized format that can be compared directly with those of other lenders.

According to the financial reform bill passed last year, developing such a form is one of the tasks of the bureau. Reportedly, lenders are not keen on the prospect, floating the idea—with a straight face, apparently—that a simplified form would “stifle innovation” in mortgage products.

Wall Street shook off the blues on Wednesday, seemingly on word that commodities are rising again (for now), with the Dow Jones Industrial Average up 80.6 points, or 0.65 percent. The S&P 500 was up 0.88 percent and the Nasdaq gained 1.14 percent.