Foreign Investment Lifted Prices 6.7% in High Foreign-Born U.S. Neighborhoods While Supply Rose 1%

Caitlin Gorback and Benjamin Keys tracked foreign buyer surges from 2011 to 2018 after Singapore and other nations taxed overseas purchases. Capital shifted to the United States, the largest high-immigration market without equivalent taxes. Areas with higher foreign-born shares recorded the price premium and minimal new construction, isolating the capital channel from domestic demand.

Nationwide supply elasticity fell to 0.26 from 2009 to 2018, down sharply from pre-2000 levels. San Francisco showed 0.06 elasticity; Charlotte absorbed demand into quantity. Baltimore’s mid-2010s permitting overhaul produced the highest measured elasticity, confirming municipal zoning and approvals as direct levers. These figures come from the Review of Financial Studies paper using city-level permit and price microdata. Foreign capital therefore compounds local regulatory constraints, pushing monthly ownership costs beyond median household income in gateway metros. Buyers without overseas income or existing equity face steeper down-payment thresholds and sustained rent pressure. Absent faster permitting reform, the price-quantity gap will widen as urban migration continues. Cities that streamline approvals can offset capital-driven demand within five years; those retaining tight zoning will see further price acceleration and reduced homeownership rates for domestic wage earners.