US residential real estate sees nearly 10% drop in foreign investment in 2023.
International Buyers in America’s Residential Real Estate Market Decline
According to the latest report from the National Association of Realtors (NAR), international buyers looking to invest in America’s residential real estate market have experienced a 9.6 percent decrease from last year. From April 2022 through March 2023, foreign buyers purchased 84,600 properties across the country, marking a 14.2 percent decrease from the previous year and the lowest number of homes purchased since 2009.
This decline is attributed to sparse inventory and rising interest rates, as stated by NAR chief economist Lawrence Yun. He explains, “Sharply lower housing inventory in the U.S. and higher borrowing costs across the world have dented international buyers for two straight years. However, recovering international travel following the end of the pandemic will bring more foreign transactions in the coming months and years.”
The median purchase price nationwide, as reported by NAR, reached a record high of $396,400. China emerged as the top buyer, spending $13.3 billion, followed by Mexico at $4.2 billion. Canada, India, and Colombia rounded out the top five international buyers.
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Chinese buyers stood out with the highest average purchase prices at $1.2 million and the highest median purchase price at $723,000. Yun explains, ”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. A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers.”
As in previous years, the top U.S. destinations for international buyers remained in states with warmer climates in the South and West. Florida maintained its position as the top destination for the 15th consecutive year, accounting for 23 percent of all international purchases. California and Texas tied for second place at 12 percent, while North Carolina and Arizona held third place, each representing 4 percent of sales.
42 percent of foreign buyers reported making all cash sales, and 50 percent of all international buyers purchased a property for use as a vacation home, rental, or both. Colombian buyers comprised the largest group of cash buyers at 67 percent, while nearly half of Canadian and Chinese buyers made cash payments.
Among all foreign buyers, 59 percent purchased detached single-family homes, whether living abroad or in the United States. Foreign buyers living overseas were more likely to purchase a townhome compared to global buyers residing in the United States. Canadians were most inclined to buy a condominium in a resort area for vacation use.
In terms of international home prices, the NAR report reveals that the City of Hong Kong is the most expensive, with an average cost per square meter of $28,570. London closely follows with an average price per square meter of $26,262. While New York remains one of the most expensive cities in the world, its average square meter cost is nearly $10,000 less at $17,191. Denmark is named the least expensive global city, with an average square meter price of $5,306.
A recent report by Juwai IQI, a global real estate technology group, supports NAR’s findings on global residential real estate purchases in the United States. The report names the United States as the world’s fourth most popular country for Chinese buyers.
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