Foreign investment in US residential real estate has dropped

by Steve Randall18 Jul 2019

There was less foreign investment in America’s residential real estate in the past year according to a report from Realtor.com.

Between April 2018 and March 2019, foreign buyers purchased $77.9 billion worth of US existing homes, 36% below the level of the previous 12 month period.

The figures are from a survey of international buyers of US homes by the National Association of Realtors.

The decline included non-resident foreign buyers who purchased $33.2 billion of homes (37% less than in the previous 12-months) and immigrants who purchased $44.7 billion (down 34%).

“A confluence of many factors – slower economic growth abroad, tighter capital controls in China, a stronger US dollar and a low inventory of homes for sale – contributed to the pullback of foreign buyers,” said Lawrence Yun, NAR chief economist. “However, the magnitude of the decline is quite striking, implying less confidence in owning a property in the US.”

Who is buying and where?

For the seventh year, Chinese buyers remain the largest cohort in dollar volume terms, with an estimated $13.4 billion worth of residential property. This was down 56% from the previous 12 months reflecting

restrictions to the outflow of capital from China imposed by Beijing and a slower Chinese economy.

While Canadian buyers bought as many homes as Chinese buyers, they only spent $8 billion as the price point of Chinese buyers’ purchases were higher on average.

Other key buyers included those from India ($6.9bn), United Kingdom ($3.8bn), and Mexico ($2.3bn).

Florida remained the top place to buy with 20% of foreign buyers.

“Many Canadians and other foreigners found Florida so enticing because of its lenient tax laws,” said Yun. “Additionally, many Florida metro areas have an inventory of cheaper properties, relatively speaking – a

combination which makes the state a very popular destination.”

California had a 12% share of foreign purchases, followed by Texas (10%), Arizona (5%), and New Jersey (4%).

What they spent

Forty-four percent of foreign buyers purchased in a suburban area, while 76% purchased single detached family homes and townhomes. The median purchase price for foreign buyers was $280,600.

Eight percent of international buyers paid $1 million or more for their property, compared to just 3% of all U.S. existing homebuyers.

Sixty-three percent of non-resident foreign buyers had an all-cash purchase transaction, compared to 25% among resident foreign buyers. Canadians were most likely to pay cash (75%).


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