- The dollar volume of homes purchased by foreigners from April 2018 through March 2019 dropped 36% from the previous year, according to the National Association of Realtors.
- Foreigners bought 183,100 properties with a total value of about $77.9 billion, down from 266,800 properties valued at $121 billion a year earlier.
- “The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.,” the Realtors’ chief economist says."
Challenging conditions in the U.S. housing market, along with tighter currency controls by the Chinese government, caused a stunning drop in foreign demand for American homes.
The dollar volume of homes purchased by foreign buyers from April 2018 through March 2019 dropped 36% from the previous year, according to the National Association of Realtors.
“A confluence of many factors — slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar and a low inventory of homes for sale — contributed to the pullback of foreign buyers,” said Lawrence Yun, NAR’s chief economist. “However, the magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.”
The Chinese were the leading buyers for the seventh consecutive year, purchasing an estimated $13.4 billion worth of residential property. Yet that was a 56% decline from the previous 12 months and comparatively the biggest percentage drop of all foreign buyers. Chinese economic growth slowed to 6.3% in 2019 compared with 6.9% in 2017, when the previous buyer survey began. The Chinese government also tightened its grip on the outflow of cash to purchase foreign property.
In the first quarter of this year, Chinese buyer inquiries for U.S. properties on Juwai.com, a Chinese real estate site, were down 27.5% from a year ago. Inquiries have been down in four of the last five quarters.
Chinese buyers were followed by Canadians ($8 billion), Asian Indians ($6.9 billion), U.K. buyers ($3.8 billion) and Mexican buyers ($2.3 billion). The Chinese purchased approximately the same number of homes as Canadians, but the Chinese bought pricier homes and therefore beat the Canadians in dollar volume. The Chinese first pulled past the Canadians in volume in 2015, surged strongly in 2018, but then fell back dramatically in the past year.
Foreign buyers include those living in the U.S. and overseas, but the majority (60%) were recent immigrants and foreigners who live in the U.S. for work, school or other reasons.
While the Realtors point to the steep runup in home prices over the past several years, as well as the shortage of existing homes for sale, foreign buyers have long been big players in the newly built housing market, where homes come at a price premium.