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Despite the slowdown in Chinese economic growth and tighter regulations on outflows of foreign exchange, Chinese foreign buyers remained as the top foreign buyer of U.S. residential property, according to NAR’s recently released 2017 Profile of International Activity in U.S. Residential Real Estate.
Chinese buyers accounted for 14 percent of all foreign buyers[1], followed by Canada (12 percent), Mexico (10 percent), India (5 percent), and the United Kingdom (5 percent).[2] As the chart below shows, the percentage of Chinese buyers to all foreign buyers has considerably increased (9 percent in 2010 to 14 percent in 2017) while the combined share of Canadian and U.K. buyers has greatly decreased (32 percent in 2010 to 15 percent in 2017). Strong economic growth in China fueled by exports and foreign direct investments and the appreciation of the yuan from 2008 through 2015 likely account for the sharp increase in Chinese foreign buyer purchases.
For the third consecutive year, Chinese foreign buyers were the top buyers in terms of the number of units purchased and in dollar volume, purchasing $31.7 billion worth of residential property. Canadian buyers purchased $19 billion of residential property; U.K. buyers, $9.5 billion; Mexican buyers, $9.3 billion; and Indian buyers, $7.8 billion.
By type of foreign client, Chinese buyers, along with Asian Indian and Mexican foreign buyers, were mostly resident foreigners (buyers who are recent immigrants or in the United States on work, student, or other visas and who reside in the United States). Among Chinese buyers, the share of non-resident buyers declined somewhat, possibly because of tighter regulations on capital outflows from China.
Canadians and U.K. buyers were mainly non-resident foreigners (buyers whose primary residence is abroad). Among Canadian and U.K. buyers, the share of non-resident foreign buyers decreased, which means a higher fraction of purchases came from resident foreign buyers. The decline in the share of non-resident foreign buyers among all U.K. and Canadian foreign buyers is likely related to the weakening of the pound (in the wake of the United Kingdom vote to leave the European Union) while stronger economic growth and slower growth in house prices may have drawn in more resident Canadian buyers. Respondents have reported fewer Canadian foreign buyers due to the weakening Canadian dollar, which has stabilized in the last year after weakening notably from 2014 to 2015 (See Appendix 2, Comments).
[1] The term international or foreign client refers to two types of clients: Non-resident foreigners (Type A) who are non-U.S. citizens with permanent residences outside the United States, and who typically purchase property as an investment, for vacations, or other visits of less than six months to the United States; Resident foreigners (Type B) who are non-U.S. citizens who are recent immigrants (in the country less than two years at the time of the transaction) or temporary visa holders residing for more than six months in the United States for professional, educational, or other reasons.
[2] The number of foreign buyers and number of properties purchased by foreign buyers are used interchangeably under the assumption that one foreign buyer purchases one property during the transaction.
