Foreign Interest in U.S. Property Slightly Dips

Posted on July 8, 2016

The international sales-dollar volume of U.S. property and buying activity from non-resident foreigners have both fallen over the past year, amid a strengthening U.S. dollar, sluggish economic growth in other countries, and higher home prices, according to the National Association of REALTORS®’ 2016 Profile of International Activity in U.S. Residential Real Estate.

Despite these trends, activity is not slipping among Chinese buyers: The dollar volume of sales from Chinese buyers exceeded the total dollar sales figure of the next top four ranked countries combined between April 2015 and March 2016, the report showed.

In total, foreign buyers purchased $102.6 billion of residential property in that time frame, a 1.3 percent decrease from last year’s survey. The number of U.S. residential properties purchased by foreign buyers was 214,885, a slight increase. Properties bought by foreign buyers, on average, tended to be valued higher, at $277,380, than the median price of all U.S. existing home sales,  $220,058.

“Weaker economic growth throughout the world, devalued foreign currencies, and financial market turbulence combined to present significant challenges for foreign buyers over the past year,” says Lawrence Yun, NAR’s chief economist. “While these obstacles led to a cooldown in sales from non-resident foreign buyers, the purchases by recent immigrant foreigners rose, resulting in the overall sales dollar volume still being the second highest since 2009. Foreigners — especially those from China — continue to see the U.S. as a solid investment opportunity and an attractive place to visit and live.”

For the fourth consecutive year, Chinese buyers exceeded all countries by dollar volume of sales at $27.3 billion, triple the dollar volume of sales from Canadian buyers (ranked second at $8.9 billion). Chinese buyers tended to buy the priciest homes, with a median price of $542,084.

“Although China’s currency modestly weakened versus the U.S. dollar in the past year, it’s much stronger than it was 5 to 10 years ago, thereby making U.S. properties still appear reasonably affordable over a longer time span,” Yun says.

Overall, both the increase in U.S. home prices — up 6 percent in March 2016 compared to one year ago — and the depreciating value of foreign currencies against the U.S. dollar made buying property a lot pricier last year, Yun notes.

“Led by Venezuela (45 percent) and Brazil (24 percent), at least eight countries, including China and Canada, saw double-digit percent increases in the median sales price of a U.S. existing home when measured in their country’s currency,” Yun says.

Which States Are Foreign Buyers Targeting?

More than half of all foreign buyers purchased a property in Florida (22 percent), California (15 percent), Texas (10 percent), Arizona or New York (each at 4 percent). NAR’s research shows that Latin Americans, Europeans, and Canadians, who tend to buy in warm climates for vacation purposes, purchased properties mostly in Florida and Arizona. Meanwhile, Asian buyers mostly targeted California and New York. Texas mostly saw sales activity from Latin American, Caribbean, and Asian buyers, according to the report.