The Association of Foreign Investors In Real Estate (AFIRE) released a survey this week with some interesting information:

• Foreign Investors are more confident about real estate and expect to buy far more real estate in the USA in 2009 than in 2008
• Foreign lenders expect to do 58% more lending here in the USA this year
• Foreign equities investors expect to increase their investment activities by 73% in the United States this year - nearly double the expected increase worldwide

Over half of the members of AFIRE cited the United States as being the most stable investment climate in the world, a marked improvement over last year.

However, I don’t know anything about AFIRE.  Maybe they’re one of those organizations that have two people staffers and only 12 members with no operating budget, yet they masquerade as a big influential organization.  (This is extremely common in political news reporting.)

And it turns out that’s partly true here - but not in a way that matters.  AFIRE has only about 200 members, making it a tiny association by any standard.  But as a group, these people own $371 BILLION in American real estate and about $1 TRILLION globally.

So these are serious players, it appears.  And they are very bullish on the US real estate market in 2009.

What do you think?  How do you expect the market to play out during the course of this year?

Thank you in advance for the very insightful comments that are so frequently made here.  We welcome your comments now:  What do you expect for real estate in the USA this year?

I have a theory: High Oil Prices will probably ultimately lead to improvement in the real estate markets.

Here’s why:

High oil prices have led to price inflation, particularly in foods and basic goods. And it appears that the Federal Reserve will soon raise interest rates to combat the growing threat of inflation.

You might think this is a negative thing, but you’d be wrong. In our current economic state, interest rate increases will be valuable because higher interest rates here will lead to more foreign investment in U.S. Dollars, as well as in dollar-denominated goods and services. In turn, this strengthens the value of the U.S. dollar.

As the value of the U.S. dollar bottoms out and begins to rise, the real cost of acquiring U.S. real estate begins to increase for foreign companies. And say what you want about America, but people in other countries know it: America is a prime location to own real estate.

Since the real cost of foreign investment in American real estate will begin to increase, it seems quite probable that the U.S. real estate market could continue its recovery in large part due to foreign investments that are sped along by the pressure of the increasing value of the U.S. dollar.

To be clear, none of this has happened yet. But it could - and I’m confident that most (if not all) of it will. It’s just a matter of time.