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Foreign buyer purchases of U.S. existing homes during April 2018–March 2019 fell sharply to $77.9 billion from the $121 billion during the prior 12-month period (April 2017‒March 2018)—a 36 percent drop, according to NAR’s recently released Profile of International Transactions in U.S. Residential Real Estate 2019. The slowdown in global growth, a stronger dollar, tighter controls on the outward flow of capital from China, and low inventory of homes for sale may account in part for the sharp decline.
Foreign buyers already residing in the United States as recent immigrants or staying in the U.S. on work, student, and for other purpose visas (Type B) purchased $44.7 billion while foreign buyers whose primary residence is abroad (Type A) accounted for $33.2 billion.
Origin and Location Preference of Foreign Buyers
The dollar volume of purchases declined for all top five buyers, with the steepest drop in Chinese purchases, which fell to $13.4 billion, a 56 percent decline from the prior level. Despite the steep decline in Chinese buyers, they remained as the top foreign buyer group in terms of dollar volume for the 7th consecutive year, followed by Canadians ($ 8 billion), Asian Indians ($6.9 billion), U.K. buyers ($3.8 billion), and Mexican buyers ($2.3 billion).
Florida remained the major destination, accounting for 20 percent of foreign buyers, followed by California 12 percent; Texas, 10 percent; Arizona, 5 percent; and New Jersey, 4 percent.
Florida was the top destination among Canadian, U.K., and Indian buyers. California was the preferred destination among Chinese buyers. Texas was the top destination among Mexican buyers.
Price, Financing, and Intended Use of Property
With the changing mix of buyers, the median foreign buyer purchase price decreased slightly to $280,600 from $292,400 during the prior 12-month period. The foreign buyer median price is slightly higher than the median price of $259,600 for all existing homes sold in the United States during the April 2018–April 2019. Eight percent of foreign buyers paid $1M and over for their property, compared to three percent of all U.S. existing home buyers.
The median purchase prices among U.K. ($510,700), Chinese ($454,900), and Asian Indian buyers ($358,600) were higher than the median purchase price among all foreign buyers while the median purchase prices among Canadian ($268,200) and Mexican ($170,100) buyers were lower than the median foreign buyer price, in part reflecting the location preferences of foreign buyers.
Forty-one percent of reported transactions were all-cash sales, compared to 21 percent for all existing home purchases during April 2018–March 2019. Canadian buyers— whose primary residence is abroad — were the most likely to pay all-cash (75 percent) while the majority of Asian Indian buyers — most of whom resided in the U.S. as recent immigrants or visa holders — obtained a U.S. mortgage. Nearly half of Chinese buyers made an all-cash purchase.
International clients purchase properties in the U.S. for residential, investment, and vacation purposes. Forty-seven percent of foreign buyers purchased the property as a primary residence. Among foreign buyers already residing in the U.S., 70 percent purchased the property for primary residential use.
Most Canadian buyers, who were non-resident foreign buyers, purchased the property to use as a vacation home and/or for residential rental. On the other hand, more than half of Asian Indian and Mexican buyers, who were predominantly resident foreign buyers, purchased the residential property for use as a primary residence. The majority of Chinese and U.K. buyers purchased the property for vacation use and/or rental. Ten percent of Chinese buyers purchased the property for student use, the highest share among the major buyers.
Referrals/Leads
Personal contacts, former clients, and referrals from former clients and business contacts accounted for 60 percent of leads and referrals among agents who worked with foreign clients who purchased residential property. Website and online listings accounted for 17 percent.
