International buyers dissuaded by rising rates, low inventory
International buyers of US homes are facing the same challenges as domestic buyers; rising interest rates and low supply of available homes.
A survey by the National Association of Realtors shows that there was a total $121 billion of sales to international buyers between March 2017 and April 2018. That’s a 21% decline year-over-year.
Recent immigrants and foreign buyers made up 8% of the $1.6 trillion existing homes sales, a 10% decline from the previous 12-month period ending March 2017.
"After a surge in 2017, we saw a decrease in foreign activity in the housing market in the latest year, bringing us closer to the levels seen in 2016," said Lawrence Yun, NAR chief economist. "Inventory shortages continue to drive up prices and sustained job creation and historically low interest rates mean that foreign buyers are now competing with domestic residents for the same, limited supply of homes."
Where the buyers are from
China was the country suppling the largest share of international buyers of US homes, a total of $30.4 billion, down 4% from 2017.
Next was Canada on $10.5 billion, which was a 45% decline from 2017; the UK on $7.3 billion, India on $7.2 billion, and Mexico on $4.2 billion.
The survey once again showed that foreign buying activity is mostly limited to three states, as Florida (19%), California (14%) and Texas (9$) remained the top three destinations for foreign buyers to purchase, followed by Arizona and New York (both 5%).
The saying goes that all real estate is local, but that does not mean that all buyers are," said NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. "Even in this current global environment of political uncertainty, the U.S. real estate market continues to be seen as a safe, secure and profitable place to invest in property."
Favored home types
Foreign buyers are most likely to purchase a detached, single-family home (66%), followed by a condominium (14%) and then a townhouse (13%). Only 3% of international buyers purchase residential land with the intent to build a home.
