The number of existing homes purchased by foreign buyers from April 2022 to March 2023 fell to the lowest level since 2009, according to a recent report by the National Association of Realtors.
International buyers bought $53.3 billion of U.S. residential real estate in the period, down 9.6% from a year earlier. The 84,600 existing homes sold was a decrease of 14% compared to the previous year.
Lower U.S. housing inventory, higher borrowing costs worldwide and a strong dollar are contributing factors to the slowdown, according to NAR chief economist Lawrence Yun.
“Among those who expressed some interest but did not complete the transaction successfully, they say it is a lack of choice,” Yun told USA TODAY. “The other part is the strong dollar, it just makes it very expensive for foreigners to buy here.”
Historically low inventory levels, down 14% from a year ago, have also kept prices high. Single-family home inventory, at 960,000, was the lowest for June since the association began tracking the data in 1982.
Foreign buyers currently residing in the U.S. as visa holders or recent immigrants (two years or less) purchased $23.4 billion of U.S. existing homes, down 31% from the prior year and representing 44% of purchase volume in dollars.
Foreign buyers living abroad bought $30 billion worth of existing homes, up 20% from the previous 12 months and accounting for 56% of the dollar volume. International buyers accounted for 2.3% of the $2.3 trillion in existing home sales during that period.
House prices and foreign buyers
The average ($639,900) and median ($396,400) sales prices for existing homes among international buyers were the highest ever recorded by NAR — and up 7% and 8.3%, respectively, from the previous year.
The increase in prices for foreign buyers mirrors the increase in U.S. home prices, as the median sales price for all existing U.S. homes was $384,200. At $723,200, Chinese buyers had the highest median 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.
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China and Canada remained first and second in US home sales volume at $13.6 billion and $6.6 billion, respectively, continuing a trend dating back to 2013. Mexico ($4.2 billion), India ($3.4 billion) and Colombia ($900 million) rounded out the top five.
“Home purchases by Chinese buyers rose after China eased the world’s strictest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” Yun added. “A stronger Mexican peso against the US dollar likely contributed to the increase in sales from Mexican buyers.”
Where did foreign home buyers buy homes?
For the 15th consecutive year, Florida remained the top destination for foreign buyers, accounting for 23% of all international purchases. California and Texas are second (12% each), followed by North Carolina, Arizona and Illinois (4% each).
“Florida, Texas and Arizona continue to attract foreign buyers despite the hot weather conditions during the summer and the significant increase in home prices that began a few years ago,” Yun said.
Florida’s top buyers were from Latin America (46%) and Canada (24%). It was the top state destination among Canadian and Colombian buyers.
California had the second largest share of foreign buyers at 12%, slightly higher than in the previous period. The majority – 61% of California’s foreign buyers – came from Asia/Oceania. It was the top destination among Chinese and Asian Indian buyers.
How do international home buyers finance their purchase?
The proportion of foreign buyers who made cash purchases was 42% compared to 26% among all buyers of existing homes.
Foreign buyers living abroad are more likely to make a cash purchase compared to foreign buyers living in the United States. 52 percent of foreign foreign buyers made a cash purchase compared to 32% among foreign buyers living in the U.S. Increased mortgage interest rates may be one reason why the share of homes purchased by foreign buyers living in the U.S. fell by 20%, Yun said.