Chinese top foreign buyers of U.S. real estate for fourth year in a row full report below see more analysis by Steve Goldstein at MarketWatch
Profile Of International Activity In U.S. Residential Real Estate by Realtor.org
Amid slower economic growth in many countries and the strengthening of the U.S. dollar, fewer non-resident foreigners purchased U.S. residential properties while resident foreigners stepped up their purchases. Meanwhile, more U.S. domestic clients searched for properties abroad.
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Residential Properties Purchased by Foreign Buyers
- Foreign buyers purchased $102.6 billion of residential real estate from April 2015—March 2016, a decrease from $103.9 billion in the previous 12-month period. Foreign buyers purchased 214,885 residential properties, a three percent increase from 208,947 in the previous 12-month period. The dollar volume decreased even as the number of residential property units purchased increased because there were fewer non-resident foreign buyers who tend to purchase more expensive properties than resident foreign buyers.
- Non-resident foreigners accounted for 41 percent of foreign buyers while resident foreigners made up 59 percent. In past years, the number of foreign buyers was split almost evenly between resident and non-resident foreign buyers. The slowdown in economic growth in many countries and the strengthening of the U.S. dollar against many foreign currencies explains in part the drop in the number of non-resident foreign buyers.
- Foreign buyers typically purchase more expensive properties. For example, foreign buyers purchased properties valued at $277,380 compared to the median price of $223,058 of all U.S. existing home sales.3 The median price of properties purchased by non-resident foreign buyers was $253,684, and the median price of properties purchased by resident foreign buyers was $298,701. However, because the distribution of non-resident foreign buyers skews to the upper end, a look at average prices shows that non-resident foreign buyers purchased properties that cost $491,427 on average compared to resident foreign buyers who purchased properties that cost $467,444.4Forty-five percent of foreign buyers who purchased residential real estate came from China ($27.0B), Canada ($8.9B), India ($6.1B), the United Kingdom ($5.5B), and Mexico ($4.8B). Non-resident foreign buyers made up the bulk of buyers from Canada and the United Kingdom while resident foreign buyers came from China, India, and Mexico.
- Although foreigners purchased property nationwide, five states accounted for 51 percent of total residential real estate purchases: Florida (22 percent), California (15 percent), Texas (10 percent), Arizona (four percent), and New York (four percent).
- Seventy-two percent of non-resident foreign buyers purchased the property as a vacation and/or residential rental property for investment while 21 percent of resident foreign buyers purchased the property for vacation and/or rental use.
- Fifty percent of reported transactions were all-cash sales. Seventy-three percent of nonresident foreign buyers made an all-cash purchase compared to 33 percent among resident foreign buyers.
- Previous client contacts and referrals accounted for 47 percent of leads for respondents who had a residential buyer.
Residential Properties Sold by Foreigners
- The majority of international clients who sold their U.S. residential real estate originated from Canada, China, the United Kingdom, Mexico, Germany, and India. Properties owned by international clients sold for $446,191 on average and a median of $245,331.
U.S. Domestic Clients Searching For Properties Abroad
- Fourteen percent of REALTOR® respondents had U.S. domestic clients who were interested in purchasing property abroad. Mexico, Costa Rica, Philippines, Colombia, and Canada generated the most interest. Seventy-nine percent of U.S. domestic clients seeking property abroad were interested in a residential real estate. Eighty-seven percent of those clients intended to use the property as a vacation home and/or residential rental property.
REALTOR® Interaction with International Clients
- Thirty-one percent of REALTOR® respondents reported working with international clients, a decrease from the 35 percent share in the previous period.
- Sixteen percent of respondents have been in the business for less than one year, up from less than one percent in 2010. This is a positive indicator of the strengthening U.S. real estate market, but it also indicates the need for additional training and information for REALTORS® who are interested in cultivating and growing their business in this niche market catering to international buyers and sellers.
- Most REALTOR® respondents are optimistic about the outlook over the next 12 months: 44 percent of respondents expect increased activity with international clients, 29 percent expect no change, 17 percent do not know, and only 10 percent expect decreased activity. After the survey was closed, the voters of the United Kingdom decided to leave the European Union in a referendum (“Brexit”). This decision rocked currency markets and has driven bond rates lower as investors flock to safe investments. The decline in the value of the British Pound is likely to mean fewer buyers from the United Kingdom. Longer-term ramifications could be mixed. Businesses and foreign real estate investors may choose to stay away from the United Kingdom, and the United States could become an attractive alternative. However, if the uncertainty impacts global economic growth, demand for U.S real estate could fall.
Profile Of International Clients Who Purchased U.S. Residential Real Estate
Volume of Foreign Buyers Purchasing Residential Property
Foreign buyers purchased $102.6 billion of residential real estate in April 2015—March 2016, a one percent decrease from the $103.9 billion of property purchased in April 2014—March 2015. Foreign buyers purchased 214,885 residential properties, a three percent increase from the previous period. The dollar volume decreased even as the number of residential properties purchased increased, in part because of the decrease in non-resident foreign buyers who tend to purchase more expensive properties than resident foreign buyers. The share of non-resident foreign buyers to foreign residential buyers decreased to 41 percent from the almost even split between resident and non-resident foreign buyers in previous years.
Foreign buyers purchased properties that, on average, were more expensive than existing-homes sales for all buyers in the United States. Foreign buyers paid $477,462 which is higher than the average price of $266,683 of existing homes sales. Ten percent of foreign buyers purchased properties valued at over $1 million, pulling up the average purchase price of properties by foreign buyers. Non-resident foreign buyers paid $491,427 while resident foreign buyers paid $467,444.
In terms of typical transactions, foreign buyers purchased properties valued at $277,380 compared to the median price of $223,058 of all U.S. existing home sales. Although nonresident foreign buyers purchased more expensive properties on average compared to resident foreign buyers, non-resident foreign buyers typically purchased less expensive properties compared to resident foreign buyers. Non-resident foreign buyers purchased properties valued at a median of $253,684, compared to resident foreign buyers who paid a median of $298,701.
For the second year in a row, Chinese foreign buyers were the top buyers in terms of the number of units purchased and dollar volume, purchasing $27.3 billion worth of residential real estate which is 26.7 percent of the dollar volume of residential real estate sold. Canadian buyers purchased $8.9 billion of residential real estate; Indian buyers, $6.1 billion; United Kingdom buyers, $5.5 billion; and Mexican buyers, $4.8 billion. Both the number of properties sold and the dollar volume from foreign buyers from Canada, China, India, and Mexico decreased from their levels one year ago. The number of properties sold and the dollar volume of sales to foreign buyers from the United Kingdom increased after a decrease in the previous period.
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