Russian buyers account for less than 1% of international buyer purchases and foreign buyers overall account for some 2% of existing home sales in the US.
Russian Buyer Purchases in US Have Little Impact on US Housing Market
A pullback in international real estate deals is reported to have little impact on the US housing market, according to the National Association’s of REALTORS ® (NAR) 2021 International Transactions in US Residential Real Estate Report.
NAR’s report indicated that Russian foreign buyers make up less than 1% of foreign buyer purchases. Foreign buyers, according to NAR, represent about 2% of US existing-home sales.
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On the plus side of potentially decreased foreign buyer demand, supply constraints that heavily impact domestic buyers may be somewhat relieved. On the minus side, slower global growth due to higher inflation and higher oil prices may pose downside risks to US housing markets as consumers have less to spend on housing.
Russian Buyers Represent Less than 1% of Foreign Buyers
According to NAR’s report, Russian buyers represented just 0.8% of foreign buyers who purchased US existing homes from April 2015-March 2021.
States in which Russian buyers purchased existing homes during April 2015 to March 2021 included:
- Florida – 29%
- Georgia – 16%
- New York – 13%
- California – 8%
- Illinois – 5%
NAR and the Florida REALTORS® Profile of International Residential Real Estate Activity in Florida each reported that Russian purchases in Florida accounted for just 0.2% of Florida’s total housing market.
Additionally, according to NAR, the majority (59%) of Russian foreign buyers who buy US residential properties already live in the US as visa holders (diplomats, students, etc.).
Chinese and European Buyers More Likely to be Impacted
The top foreign buyers of US existing homes and condominiums during April 2015 – March 2021 included:
- China – 12%
- Canada – 11%
- Mexico – 8%
- India – 6%
- UK – 3%
The two foreign buyer groups that appear to be the most negatively impacted by the Ukraine-Russia conflict are Chinese and European buyers. Why? The Chinese rely on Ukraine for wheat, corn and sunflower oil and the delivery of those goods is now blocked by the Russians. Bottom line…massive shortages and impending huge price hikes.
For Europe and European buyers, 66% of Europe’s crude imports and 41% of the EU’s natural gas come from Russia. Bottom line…Western European countries face a looming, massive energy crisis. and huge price hikes.
Oil producing countries such as Canada, Mexico, Brazil and Saudi Arabia will be less impacted by the Ukraine-Russia crisis.
Economies of Oil Producing States Likely to Grow
As Russian oil is blocked by the US, oil-producing states will increase their output to compensate for any shortfalls. Of course, more oil production translates into more employment in those states which translates into more housing demand and higher home prices.
The share of US crude oil production by state looked like this in 2020, according to the US Energy Information Administration:
- Texas – 43.1%
- Gulf of Mexico – 14.7%
- North Dakota – 10.4%
- New Mexico – 9.2%
- Oklahoma – 4.1%
- Colorado – 4.0%
- Alaska – 4.0%
- California – 3.5%
- Wyoming – 2.2%
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Thanks to National Association of REALTORS® and US Energy Information Administration.
