Brokers dealing with out-of-country investors are seeing some pause, while others are pushing ahead
Brokers and real estate agents who work with real estate buyers and investors from foreign countries are seeing a mixed reaction from clients after the Trump administration’s tariff announcement Wednesday.
Some buyers and investors are pausing potential transactions, either to assess the impact of the new tariffs or as a form of protest.
The tariffs announced on Wednesday were in addition to previous tariffs levied against Canada and Mexico. The new tariffs added a 10% tariff on all imports and a sizeable additional tax on dozens of countries.
Parisa Afkhami (pictured top) is an agent with Coldwell Banker Warburg in New York City. She works with buyers from many countries, including Brazil, Dubai, and Canada, as well as others from various parts of the Middle East and Europe. She said some clients are hitting pause to see how the tariffs play out.
“I’m working with a buyer from Canada right now who has temporarily stalled the process,” Afkhami said. “It’s a wait-and-see approach to see where things are going to go.”
While some countries affected by Wednesday’s tariff announcement have opted against countermeasures for now, China announced a 34% tariff on all imports of US goods as retaliation – and some foreign buyers are reluctant to invest in the US mortgage market at present because of the prospect of a prolonged trade war.
Looking for more clarity after tariff implementation
Mortgage Bankers Association (MBA) chief economist Mike Fratantoni (pictured below) echoed Afkhami’s sentiment that foreign buyers and investors may want to see the fallout before moving forward.
“Foreign investors may just be a little more hesitant to invest in US property until they get a clearer picture of what the policy environment is going to look like,” Fratantoni said.
Fratantoni noted that the US dollar was faring strongly against foreign currencies for a while. Now that the dollar is dropping slightly, foreign investors may want to see where it stabilizes before entering the housing market.
“Those currency effects can have a big impact on foreign investment as well,” Fratantoni said. “And so again, they might just take a pause and say, ‘I'm going to wait to see where the dollar sort of levels out, until I go ahead and do something as momentous as buying a piece of property.’”
Damon Germanides (pictured below), a mortgage broker and co-founder of Insignia Mortgage, doesn’t necessarily believe that the tariffs will deter foreign investors. He thinks lower rates and a weaker dollar may present an opportunity for foreign buyers.
“When the US dollar got really strong and rates went up a bunch, we saw a pretty big slowdown in foreign buyers buying,” Germanides said. “But if rates have come in a little bit and the dollar’s weakened a bit, we've seen people come back in the market. Your typical foreign buyers are fairly wealthy, normally. So I think there's a lot of things that play into it, and I don't know if tariffs will play into them by buying or not buying here.”
How much rates will be lowered remains to be seen. President Trump clashed with Federal Reserve chair Jerome Powell on Friday, with Trump demanding immediate rate cuts while Powell appeared to rule them out. Forecasts on Friday suggested that the central bank may consider cutting rates by up to 100 basis points over the remainder of 2025, while market expectations of an emergency rate cut have also jumped.
Following Trump's global tariffs, markets anticipate the Fed will cut rates by 100 basis points in 2025 to counter recession fears.https://t.co/vjnxl4B2k0
— Mortgage Professional America Magazine (@MPAMagazineUS) April 4, 2025
A weakened dollar may bring more foreign investment
Fratantoni believes the trade deficits have led to foreign buyers having the resources to invest in mortgage-backed securities (MBS). He notes that having a trade deficit means having a capital surplus, which has led foreign buyers to reinvest that money into US securities, including those backed by mortgages.
While the tariffs may cause some investors to wait, Fratantoni believes the appeal of investing in the US market may be too great to pass up.
“A lot of foreign investors who have always been very much proponents of owning US securities,” Fratantoni said. “And that has benefited the mortgage market and made it one of the most liquid markets in the world. I don't see that going away, but you know, (the tariffs) could be a potential headwind.”
Afkhami said several of her clients have expressed concern about the tariffs, but others believe purchasing property in the US is still too good an opportunity to pass up.
“I just spoke with my client from Brazil about this,” Afkhami said. “Inflation is happening all over the world. Even among all the turmoil, the US is still the most liquid in terms of capital markets in the world. There’s still stability in the US that makes it attractive.
“The market is down, and people may feel like they are losing wealth. But for international people, a declining dollar can be a positive in terms of their purchasing power. We have to look broader. It’s not all doom and gloom, as a weakening dollar might bring more investors.”
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