Supply shortage and high prices deter international homebuyers
Foreign investment in existing residential properties fell to its lowest level since 2009, the National Association of Realtors reported Tuesday.
The number of existing homes sold to international buyers from April 2022 to March 2023 declined 14.2% to a record low of 84,600 units. Overall, annual foreign investment was down 9.6% to $53.3 billion.
“Sharply lower housing inventory in the US and higher borrowing costs across the world have dented international buyers for two straight years,” NAR chief economist Lawrence Yun explained.
Read more: Revealed – what’s impacting existing home sales?
The decline was notable among immigrants, who purchased $23.4 billion worth of existing homes. That’s down 31.4% from the prior year and represents 44% of the dollar volume of purchases. Meanwhile, foreign buyers who lived abroad purchased $29.9 billion worth of existing homes, up 20% and accounting for 56% of the dollar volume. International buyers made up 2.3% of the $2.3 trillion in existing-home sales during that period.
According to NAR’s report, 50% of foreign buyers purchased their property for use as a vacation home, rental property, or both – up from 44% year over year. About 59% of international buyers purchased detached, single-family homes.
Reflecting the burgeoning home prices during the period, the average and median purchase prices among international buyers soared to all-time highs of $639,900 and $396,400, respectively. Chinese buyers had the highest average purchase price, with a third (33%) purchasing property in California. In total, 15% of foreign buyers purchased properties worth more than $1 million from April 2022 to March 2023.
Top five countries of origin by number of existing homes purchased:
- China
- Mexico
- Canada
- India
- Colombia
The top destinations for foreign buyers:
- Florida (23%)
- California and Texas (12% each)
- North Carolina, Arizona, and Illinois (4% each)
“Home purchases from Chinese buyers increased after China relaxed the world’s strictest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” Yun said. “A stronger Mexican peso against the US dollar likely contributed to the rise in sales from Mexican buyers. Florida, Texas and Arizona continue to attract foreign buyers despite the hot weather conditions during the summer and the significant spike in home prices that began a few years ago.”
Yun is also optimistic that recovering international travel following the end of the pandemic will bring more foreign transactions in the coming months and years.
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