Shifting Tides: Exploring the Dwindling Trend of Foreign Home Purchases
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Episode Transcript:
Today, we're diving into a significant shift in the U.S. housing market — foreign buying of homes in the United States has hit its lowest level on record.
According to a recent report from the National Association of Realtors, international buyers purchased 84,600 U.S. homes in the year ending March, marking a 14% decline from the previous year. The dollar volume of residential real estate purchased by these buyers also fell by 9.6% to $53.3 billion, a record low since data collection began in 2011.
The reasons behind this decline mirror some of the challenges faced by American buyers. Skyrocketing housing prices and limited inventory have priced many out of the market, including foreign investors. The stronger dollar has also played a role in deterring international buyers.
Despite the decline, foreign purchases of U.S. homes saw a smaller drop compared to the 23% decline in U.S. existing-home sales during the same period. Foreign buyers often pay with cash, making them less sensitive to mortgage rate fluctuations.
Interestingly, foreign buyers tend to invest more in their purchases, with the median purchase price being $396,400 compared to $384,200 for all U.S. home sales in the same period. Some brokers even report signs of renewed interest among foreign buyers, attributing it to eased Covid restrictions in certain countries, particularly China.
While foreign buyers represent a small fraction of the overall U.S. housing market, their influence is more pronounced in specific states like Florida, California, and Texas. These destinations have been particularly popular among international buyers.
In Florida, for example, Latin American buyers are showing robust demand for luxury properties, drawn by the relative affordability compared to Miami. Despite a recent law limiting property purchases for residents of certain countries, foreign buyers from other regions are still keen on investing in the state.
In New York City, foreign investors are exploring opportunities in the market due to attractive rental property prospects. However, they approach the decision with caution, knowing it's not one to be made lightly.
Overall, around 51% of foreign buyers are recent immigrants or foreigners residing in the U.S., while nonresidents typically purchase U.S. homes as rental properties or vacation homes.
This is Tyler Cauble, Signing off