Foreigners Buy Fewer American Homes »RealtyBizNews: Real Estate News
Foreigners are buying fewer American homes, according to a report from the National Association of Realtors last week.
The number of residential properties purchased by international buyers plunged 31% in the 12-month period between April 2020 and March 2021, according to the data. The total value was $ 54.4 billion for 107,000 homes, a 27% year-over-year decline.
While the drop may be partly explained by restrictions imposed due to COVID-19, the NAR noted that this was the fourth year in a row that overseas home purchases have declined. .
Indeed, the dollar and sales volume were at their lowest levels since 2011, when foreigners spent just $ 66.4 billion on 210,800 homes in the United States, the chief economist of the United States said. the NAR, Lawrence Yun.
âThe sharp drop in foreign home purchases in the United States over the past year is no surprise, given the lockdowns induced by the pandemic and international travel restrictions,â Yun said.
The COVID-19 pandemic initially caused residential real estate transactions to come to a screeching halt in the United States, with sales of existing homes falling to a seasonally adjusted annual rate of just 4.01 million in May 2020. tours and digital tools to enable home visits and transactions, and sales peaked at 6.73 million in October, the NAR said.
The report adds that home purchases in the United States by international buyers began to decline in 2018. This was due to a drop in activity by Chinese buyers, whose home purchases fell 56% between April 2018 and March 2019. British home purchases fell 48%. that same year, the NAR noted. That caused the total dollar volume of overseas home purchases to fall by 36% in mid-2019 to $ 77.9 billion.
Since then, international purchases of residential homes have plummeted. Interestingly, however, the NAR report says the drop is not just due to the difficulty foreigners have in visiting the United States due to COVID-19 restrictions. Foreign buyers who already resided in the United States as recent immigrants and those who held visas allowing them to live in the country purchased $ 32.4 billion worth of existing homes, down 21% from one year ago. This represented about 60% of the total dollar volume of all homes purchased by non-U.S. Citizens.
Foreign buyers who lived abroad bought $ 22 billion worth of existing homes in the United States in the past year, down 33% from the previous year. This represented the remaining 40% of the dollar volume. In total, international buyers accounted for just 2.8% of all existing home sales during the period.
The report showed that foreign homebuyers pay at least a slight premium over Americans. The median selling price of existing homes among foreign buyers was $ 351,800, 15% more than the median price paid by Americans.
The majority of foreign buyers seem drawn to the sea and the sun, with Florida remaining the number one destination for the 13th consecutive year. The Sunshine State accounted for 21% of all international home purchases, with California coming in second with 16%, Texas in third with 9%, Arizona in fourth at 5%, and New Jersey and New York tied in fifth with 4%.
Looking at where foreign buyers are coming from, the number one source remains China. Chinese buyers contributed $ 4.5 billion to the total sales volume, ahead of Canadians who accounted for $ 4.2 billion. Indians ($ 3.1 billion), Mexicans ($ 2.9 billion) and Britons ($ 2.7 billion) round out the top five. The report notes that the UK was actually the only country in the top five where buyers actually increased their dollar volume of home purchases, from $ 1.4 billion to $ 2.7 billion in the past. during the period.
The annual dollar volume for buyers from China, Canada and Mexico fell more than 50% in each case. Chinese buyers, for example, had spent $ 11.5 billion on existing homes in the United States during the period April 2019 to March 2020.
The Chinese were still paying the highest prices, with a median purchase price of $ 476,500, according to the report.
Looking at the types of homes purchased by foreigners, the report noted that 65% were detached single-family homes or townhouses. About 49% of homes purchased by foreigners were in the suburbs, while 28% were in urban areas. According to the report, only 7% of foreign home purchases took place in resort areas.
The NAR has warned that the number of overseas home purchases may well remain low next year if COVID-19 cases in the United States remain high.