According to the National Association of REALTORS ® (NAR), the dollar volume generated from foreign buyers dropped a hefty -36% from April 2018 to March 2019. Chinese buyers led the exodus.
Lawrence Yun, the chief economist with NAR, said, “The magnitude of the decline is quite striking, implying less confidence in owning a property in the US.”
According to CNBC’s Diane Ollick, “challenging conditions in the US housing market plus tighter currency controls by the Chinese government caused the stunning drop in foreign demand.” Foreign buyers bought 183,100 residential properties for a total value of $77.9B compared to the previous period in which foreign buyers purchased 266,800 properties valued at $121B.
Yun sees this eye-popping decline of foreign investment as “…a confluence of many factors…slower economic growth abroad, tighter capital controls in China, a stronger US dollar and low inventory…contributed to this pullback of foreign buyers.”
The Chicago Agent Magazine reported that recent economic data from outside the US points to “sluggishness globally” that may continue into 2020. On top of China recently reporting its slowest rate of economic growth since 1992 at 6.3% (with some talk that it may slow to 4%), Mexico is projected to have entered a recession in Q2 2019 and the UK economy remains on edge pending Brexit negotiations.
Chinese buyers have led all other foreign buyers for the last seven consecutive years. This year, Chinese purchased an estimated $13.4B in US residential properties. This represents a -56% decline from the previous 12 months, comparatively the biggest percentage drop among all foreign buyers. Canadians purchased $8B in US residential properties; Asian Indians purchased $6.9B, Britain purchased $3.8B and Mexican buyers purchased $2.3B in US residential properties. British buyers spent the most coming in with a median purchase price of $510,700 while the median purchase price among all foreign buyers was $280,600, down from $290,400 during the previous year.
Florida was the hottest market among foreign buyers. The state’s combination of lenient tax laws and an inventory of cheaper properties attracted 42% of all Canadian buyers. One third of Chinese buyers looked to California to buy while Texas was especially popular with Indian and Mexican buyers. Arizona, New Jersey, North Carolina, Illinois, New York and Georgia rounded out this popularity poll.
