Foreign Purchases of U.S. Homes Drop Sharply As Chinese Bolt From Market

July 17, 2019 by Dan McCue
Foreign Purchases of U.S. Homes Drop Sharply As Chinese Bolt From Market
A private home in Princeton, New Jersey. (Photo by Dan McCue)

WASHINGTON – International investment in residential real estate in the United States plunged 36% in the past year as Chinese buyers fled the market, the National Association of Realtors said Wednesday.

The sobering analysis comes via the Realtors’ annual survey of residential purchases from international buyers.

It found that while China continues to exceed all other countries in terms of the dollar volume of purchase — a distinction it has held for seven consecutive years — the value of those purchases came to just $13.4 billion during the survey period of April 2018 through March 2019.

That represents a 56% decline from the previous 12 months, the Realtors said.

The pull-back came amidst an ongoing trade rift between the U.S. and China, and a related slowing of Chinese economic growth, the pace of which declined 6.3% in 2019, compared to 6.9% two years earlier.

Another factor is the Chinese government deciding to tighten the monitoring of dollar outflows since 2016 to better manage its foreign exchange reserves.

As for the relative disinterest of other foreign buyers, the Realtors place the blame mostly on a paucity of available homes to buy and an overall decline in global economic growth, which enjoyed an upswing in 2016 and 2017, but slowed to 36% in 2018, and is now on a pace to taper further, to 3.3% this year.

Despite the readily identifiable confluence of factors, Lawrence Yun, the Realtors’ chief economist, said “the magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.”

Market Sees $43.1 Billion Decline in Purchases

Overall for the 12 months ending in March, foreign buyers purchased $77.9 billion worth of U.S. existing homes, down from $121 billion the previous 12 months — a decline of $43.1 billion.

The dollar volume of purchases saw a decline as the number of purchases, as well as the average price, decreased from the previous year.

Foreign buyers were able to buy 183,100 properties at an average price of $426,100.

Following China, the next top foreign buyer for 2019 was Canada at $8 billion. While Chinese investors and Canadian investors tied concerning the number of purchases, on average, Chinese buyers bought properties at a higher price point. Therefore, China ranked ahead of Canada in terms of dollar volume.

The third top international buyer was India at $6.9 billion, the United Kingdom was fourth at $3.8 billion and in fifth was Mexico at $2.3 billion.

Where Are They Buying?

As they collected their data, the Realtors found foreign buyers continue to be smitten with Florida, which attracted 20% of them during the survey period. Canadians accounted for more than 42% of those buyers.

“Many Canadians and other foreigners found Florida so enticing because of its lenient tax laws,” Yun said.

“Additionally, many Florida metro areas have an inventory of cheaper properties, relatively speaking – a combination which makes the state a very popular destination,” he said.

California was the second largest market for foreign investment, accounting for 12% of international purchases.

Texas came in third, with 10 percent of purchases, followed by Arizona and New Jersey.

Purchase Prices

According to the survey, 44% of foreign buyers purchased in a suburban area, with 76% purchasing single detached family homes and townhomes. The median purchase price for foreign buyers was $280,600, slightly higher than the $259,600 average for all U.S. existing homes sold.

Yun attributed the price difference is a reflection of the choice of location and the kinds of properties desired by foreign buyers.

The survey also showed that international buyers are more likely to purchase their homes in cash than all existing homebuyers. Forty-one percent of the reported transactions were all-cash sales, in comparison to 21% for all existing-home purchases during the 2019 assessment reference period.

The survey presents information about transactions with international clients during the 12-month period between April 2018 and March 2019. A total of 11,812 Realtors responded to the 2019 survey.

A+
a-
  • Canada
  • China
  • foreign buyers
  • home sales
  • international
  • National Association of Realtors
  • In The News

    Health

    Voting

    Economy

    June 14, 2024
    by Dan McCue
    Nation’s Top Business Leaders Host Trump, Rate Economy ‘Stable’

    WASHINGTON — The Business Roundtable, the exclusive group of businesses that is also one of the most powerful lobbying organizations... Read More

    WASHINGTON — The Business Roundtable, the exclusive group of businesses that is also one of the most powerful lobbying organizations in the nation, played host to former President Donald Trump on Thursday, and also released its quarterly assessment of the U.S. economy. At least 80 of... Read More

    May 21, 2024
    by Dan McCue
    With Memorial Day Approaching, White House Moves to Keep Gas Prices Low

    WASHINGTON — With Memorial Day weekend fast approaching and the summer driving season just around the corner, the Biden administration... Read More

    WASHINGTON — With Memorial Day weekend fast approaching and the summer driving season just around the corner, the Biden administration announced it will sell 1 million barrels of gasoline from federal reserves to lower prices at the pump for all Americans. Energy Secretary Jennifer Granholm said... Read More

    April 12, 2024
    by Kate Michael
    IMF Director Sets the Stage for IMF-World Bank Spring Meetings 

    WASHINGTON — As the world's finance ministers and central bank governors prepare to convene in Washington, D.C., for the IMF-World... Read More

    WASHINGTON — As the world's finance ministers and central bank governors prepare to convene in Washington, D.C., for the IMF-World Bank spring meetings next week, Kristalina Georgieva, managing director of the International Monetary Fund, spoke about how this event comes at a delicate moment for the... Read More

    April 8, 2024
    by Dan McCue
    Biden Administration Invests $6.6B to Bolster US Chip Manufacturing

    WASHINGTON — The Biden administration is awarding up to $6.6 billion in grants to the Taiwan Semiconductor Manufacturing Company, the... Read More

    WASHINGTON — The Biden administration is awarding up to $6.6 billion in grants to the Taiwan Semiconductor Manufacturing Company, the largest maker of the most advanced microchips in the world, to help support construction of the company’s first major hub in the United States. The announcement... Read More

    Inflation Slowed Further in December as Economic 'Soft Landing' Moves Into Sharper Focus

    WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge cooled further last month even as the economy kept growing briskly, a... Read More

    WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge cooled further last month even as the economy kept growing briskly, a trend sure to be welcomed at the White House as President Joe Biden seeks re-election in a race that could pivot on his economic stewardship. Friday’s... Read More

    Americans' Economic Outlook Brightens as Inflation Slows and Wages Outpace Prices

    WASHINGTON (AP) — After an extended period of gloom, Americans are starting to feel better about inflation and the economy —... Read More

    WASHINGTON (AP) — After an extended period of gloom, Americans are starting to feel better about inflation and the economy — a trend that could sustain consumer spending, fuel economic growth and potentially affect President Joe Biden's political fortunes. A measure of consumer sentiment by the University of Michigan has... Read More

    News From The Well
    scroll top