NAR: Steep Decline in Foreign Buyers Signals Broader Economic Woes
July 17, 2019
Real estate purchases by foreign buyers are declining, and a slowdown in global economic growth, coupled with low housing inventory, is the likeliest contributor to the drop over the past year, according to the National Association of REALTORS®’ 2019 Profile of International Transactions in U.S. Residential Real Estate, a survey released Tuesday.
Chinese buyers remain the most active of foreign real estate purchasers in the U.S., although they’ve been accounting for fewer sales. Some housing analysts say tighter controls on the outward flow of capital from China is one of the main causes of a pullback in Chinese investment.
Overall, from April 2018 to March 2019, foreign buyers poured $77.9 billion into U.S. real estate purchases, a 36% decrease from the year prior. In that same time period, foreigners made 183,100 total home purchases in the U.S., which is down 31% from a year ago and comprises 3% of existing-home sales. Transactions involving foreign buyers peaked at $153 billion worth of home purchases between April 2016 and March 2017, but has fallen since.
“A confluence of many factors—slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar, and a low inventory of homes for sale—contributed to the pullback of foreign buyers,” says NAR Chief Economist Lawrence Yun. “However, the magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.”
Still, foreign buyers can be lucrative clientele for real estate pros: Foreign buyers purchased properties with an average price of $426,100 in the last year.
The top 5 foreign buyers of U.S. property by dollar amount
- China: $13.4 billion
- Canada: $8 billion
- India: $6.9 billion
- United Kingdom: $3.8 billion
- Mexico: $2.3 billion
Working with International Buyers
About 20% of real estate pros say they worked with international clients in the last year. Personal contacts, former clients, and referrals were the primary lead sources for practitioners who worked with international clients; website and online listings accounted for only 17%. Pros also report helping international clients lease U.S. properties.
Foreign buyers purchase homes across the country, but they have targeted a handful of states recently.
- Florida remains the top destination for foreign buyers, attracting 20% of the international home purchase market in the U.S. Forty-two percent of Canadian buyers in the U.S. purchased property in Florida in the last year.
- California was the second most popular destination, accounting for 12% of foreign purchases. That's down from a year ago and is mostly attributed to the decrease in Chinese buyers. Thirty-four percent of Chinese buyers purchased a property in California in the last year.
- Texas accounted for 10% of U.S. purchases by foreign buyers. Asian, Indian, and Mexican buyers most often targeted Texas.
- Arizona and New Jersey round out the top five, accounting for 5% and 4%, respectively, of foreign purchases in the U.S.
Other top destinations for foreign buyers include North Carolina, Illinois, New York, and Georgia, each accounting for 3% of all foreign home purchases.
Other notable findings from NAR’s report:
- 47% of foreign buyers purchased a property as a primary residence.
- 44% purchased a home in a suburban area.
- 65% purchased a detached single-family home, and 11% purchased a townhome.
- 41% of foreign buyers paid cash for their homes (compared to 21% of existing-home buyers).
“2019 Profile of International Transactions in U.S. Residential Real Estate,” National Association of REALTORS® (July 17, 2019)
Updated: August 23, 2019