According to a recent NAR study, foreign investment in U.S. real estate increased 8.5% to $5.9 billion from April 2021 to March 2022, ending a three-year slide.
While fewer homes were purchased (largely due to pandemic restrictions), the higher total cost offset the decline in sales. International buyers purchased a total of 98,600 residential U.S. properties. This is down 7.9% from the previous twelve months — the lowest since NAR started tracking in 2009.
But the average ($598,200) and median ($366,100) purchase prices for those properties were the highest NAR has recorded.
With the lifting of travel restrictions, realtors across the U.S. (especially in the hot spots mentioned below) are bracing for a flood of foreign investments in U.S residential properties.
The buyers behind foreign investment in U.S. real estate
We’re looking at two different categories of foreign buyers:
- Foreign buyers who live outside the U.S. (Type A) – Buyers residing outside the U.S. purchased $24.9 billion of existing U.S. homes – 13.2% more than the previous 12 months and representing 42% of total foreign investment purchases.
- Foreign buyers who live in the U.S. (Type B) – As recent immigrants or visitors with visas that allow them to live in the U.S., foreign buyers already living in the U.S. purchased $34.1 billion worth of existing U.S. homes. This is 5.2% more than the previous year and 58% of the total dollar volume of foreign investment purchases.
Here are the top five countries of origin for foreign investors:
- China – $6.1 billion in U.S. residential real estate
- Canada – $5.5 billion in U.S. residential real estate
- India – $3.6 billion in U.S. residential real estate
- Mexico – $2.9 billion in U.S. residential real estate
- Brazil – $1.6 billion in U.S. residential real estate
Chinese buyers paid the highest average price for U.S. properties at just over $1 million. Nearly a third (31%) purchased homes in California.
The top U.S. housing markets for foreign investors are:
- Florida – 24% (holding the number one spot for the 14th straight year)
- California – 11%
- Texas – 8%
- Arizona – 7%
- New York – 4%
- North Carolina – 4%
All Cash Sales
Mortgage rates cease to be an issue with all cash sales, which account for 44% of all foreign buyer transactions—almost twice the rate of existing home buyers.
Non-resident foreign home buyers (60%) were twice as likely as resident foreign buyers (30%) to make all-cash purchases.
With mortgage rates as high as they are in the U.S., domestic home sales are expected to decline, but foreign investments—especially all-cash purchases—will likely increase.
Intended Use of the Property
Foreign buyers purchased U.S. property for the same reasons as domestic home buyers. Forty-four percent bought them for use as vacation homes, rental property, or both. About two-thirds of (64%) bought detached single-family homes or townhomes.
Almost half (46%) bought homes in the suburbs, while 29% bought homes in urban areas. Those figures haven’t changed much over the past five years.
Only five percent bought a property in a resort area—a 12% drop from 2012 (17%).
What does this mean for you as an agent?
NAR provides specialized training and support for real estate professionals working in this niche market. It’s worth looking into if you expect or hope to provide service to foreign buyers.
In any case, staying on top of data and trends for the U.S. housing market—becoming a go-to knowledge broker for your community—is essential to your growth in the shifting market.