International buyers are retreating from the US housing market as high mortgage rates, rising home prices, a low supply of homes for sale and a strong dollar make purchases significantly less financially attractive.
From April last year to March this year, international buyers bought around 84,600 homes; That’s the lowest number since the National Association of Realtors began tracking such purchases in 2009, and down 14% from a year earlier.
related investment news
And although foreign buyers bought fewer houses, they paid more for them. The average price of the homes they bought was $396,400, the highest realtors have ever recorded.
China, Mexico, Canada, India and Colombia were the top five source countries for international buyers of existing homes, measured by number of homes rather than dollar volume. The survey does not include new buildings where international buyers are also active.
Chinese buyers had the highest average purchase price at $1.23 million, likely because a third of them bought in California, where home prices are highest. Overall, 15% of foreign buyers bought homes worth more than $1 million.
“Home buying by Chinese buyers increased after China eased the world’s toughest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” said Lawrence Yun, NAR’s chief economist, in a press release. “A stronger Mexican peso against the US dollar likely contributed to the increase in sales by Mexican buyers.”
While foreign sales declined overall, Chinese purchases made significant gains. According to Juwai IQI, an Asia-based international real estate technology group, the total number of Chinese home purchases in 2023 is the highest since 2018, one of the peak years for Chinese international property purchases.
“Only about 1 in 10 Chinese buyers are pure-investment buyers, a big change from the mid-2010s when wealthy Chinese consumers were looking to diversify their wealth outside of China,” said Kashif Ansari, co-founder of Juwai IQI and CEO. “By 2023, the typical Chinese buyer will no longer be an offshore investor but will be on the way to becoming an American resident and citizen.”
Foreign buyers continue to flock to the same places as in the past, namely Florida (23%), California (12%), Texas (12%), North Carolina (4%), Arizona (4%) and Illinois (4%). ). Chinese shoppers in particular like California, as they often buy so their children can attend local schools and universities.
“Florida, Texas and Arizona continue to attract foreign buyers, despite the hot summer weather conditions and the significant surge in home prices that began a few years ago,” Yun added.
About 42% of foreign buyers used cash. In terms of reason for buying, half of respondents bought the property for vacation home, rental or both, compared to 44% last year.
The decline in total overseas purchases is unlikely to ease competition for domestic buyers, as international buyers accounted for just over 2% of all buyers. But it could improve margins in certain local markets most favored by overseas buyers.
Today, however, domestic buyers are more concerned about mortgage rates, which are more than double what they were in the first two years of the pandemic, and the low supply of homes for sale.