08 Aug Foreign Investment Down in U.S. for Existing-Home Sales — RISMedia |
The National Association of REALTORS® (NAR) recently released its 2020 Profile of International Transactions in U.S. Residential Real Estate. The report looks at international buying for the 12-month period between April 2019 and March 2020.
In that time period, foreign buyer residential purchases totaled $74 billion in dollar volume—a 5 percent decrease from $77.9 billion in the prior year. Additionally, 154,000 existing homes were purchased by foreign buyers in that 12-month period, which is 3 percent of all existing-home sales, and a decrease of 16 percent compared to the prior year.
What does it mean to be a foreign buyer? There are two categories, according to NAR.
– Non-resident foreigners: Non-U.S. citizens with permanent residences outside the United States
– Resident foreigners: Non-U.S. citizens who are recent immigrants (less than two years at the time of transactions) or non-immigrant visa holders who resident for more than six months in the U.S. for professional, educational or other reasons.
In this 12-month period, 62 percent of foreign buyers were those who resided in the U.S. as recent immigrants or visa holders.
“Foreign buyers and recent immigrants have become less of a force in the U.S. housing market over the last couple of years,” said NAR Chief Economist Lawrence Yun. “A lack of housing inventory—the primary factor hindering domestic buyers—is also holding back some foreign buyers. Additionally, less cross-border travel, falling international trade and fewer foreign students attending American universities are impacting foreign homebuyers.”
On a transaction basis, $15 billion came from China, $9.5 billion from Canada, $5.8 billion from Mexico, $5.4 billion from India and $1.3 billion from Colombia. The median existing-home sale price among international buyers was $314,600—15 percent higher than the median price for all existing-homes sold in the U.S., which is $274,600. Chinese buyers had the highest median purchase price at $449,500.
“In the upcoming year, better opportunities may become available for foreign buyers in large U.S. cities like New York and San Francisco,” said Yun. “New patterns of domestic migration are trending away from expensive cities to more affordable suburbs and small communities because of the pandemic and greater work-from-home possibilities.”
According to NAR, 48 percent purchased in the suburbs, while 29 percent purchased in an urban area. Additionally, 7 percent of international buyers purchased homes in a resort area, down from 15 percent in 2009.
Location-wise, Florida remains the top destination for the 12th straight year—22 percent of all international purchases happened in this state. The next most popular areas? California came in second (15 percent), followed by Texas (9 percent), New York (5 percent) and New Jersey (4 percent).
“While we’ve seen a recent softening of demand, interest in U.S. real estate from international buyers remains strong overall, especially in the most affordable metropolitan areas,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif.
“Driving economic development through diverse and inclusive communities continues to be a top priority for NAR,” said Katie Johnson, NAR’s general counsel and chief member experience officer. “NAR collaborates with associations across the country to educate foreign buyers on the opportunities in U.S. real estate and maximize the global business potential in our local markets. NAR and the REALTOR® brand—built on professionalism—has grown to a network of 104 real estate associations across 85 countries, ensuring stable, accessible markets that allow our members to make direct connections with global real estate professionals and sources of foreign investment.”
For more information, please visit www.nar.realtor.