While the pandemic-driven US housing boom attracted scores of domestic buyers, restrictions on international travel have caused foreign buyer purchases to plummet to the lowest level in a decade, according to a new report from the National Association of Realtors (NAR).
Between April 2020 and March 2021, the number of existing US homes purchased by foreign buyers declined 31 percent year-over-year to $54.4 billion in sales. In total, 107,000 properties were snapped up by buyers from across the globe, compared to 183,100 during the previous 12-month period.
Foreign buyers made up just 1.8 percent of existing-home sales, down substantially from a peak of 5.2 percent in 2017. Their purchases accounted for 2.8 percent of the $5.8 trillion spent on existing-home sales, a far cry from 2017’s 10 percent dollar volume.
California was the second-hottest US market among foreigners, with nearly half (47 percent) of its buyer pool coming from Asia/Oceania. The Golden State was the top market among purchasers from China (34 percent) and India (40 percent). It also proved popular with buyers from Mexico, with 21 percent of this cohort choosing to purchase property in California.
“Geographical proximity, the presence of family and friends, and the tech sector jobs in California are the factors that are likely driving Chinese buyers to purchase property in California,” wrote NAR Research Economist Scholastica “Gay” Cororaton in the report.
Florida was named the most active state for foreign buyer residential real estate purchases. Most of Florida’s international buyers hailed from Latin America (34 percent), Europe (23 percent) and Canada (17 percent). Florida’s position along the Atlantic coast makes it an accessible vacation home destination for sun seekers.
Texas followed California with 9 percent of the share of foreign buyers, trailed by Arizona, New Jersey and New York. Canadians purchased more US real estate than any other foreign nationality at 8 percent, or $4.2 billion. Many are ‘snowbirds’ who flock to states like Florida and Arizona to ride out the winter. Canadian residents can typically stay in the US for up to six months a year without obtaining a visa.
The drop-off in foreign buyers had “little impact” on the red-hot US housing market during the 12-month period, noted Cororaton, adding that the decline may have helped to alleviate at least some of the frenzied demand for housing during the pandemic.
Looking ahead, Cororaton expects foreign home buying activity to “tick up a little in 2021 and 2022,” as Trump-era immigration restrictions loosen and international travel picks up. However, the report stressed that the spread of the Delta variant could hamper next year’s market outlook.