Foreign buyers cut back their
investment in U.S. residential properties over the 12 months that ended in
March. It was the second year-over-year decline.

The National Association of
Realtors® (NAR) annual survey among its members about their transactions with
international clients found foreign buyers purchased $74 billion in existing U.S.
homes from April 2019 through March 2020, a 5 percent decline from the same
period a year earlier.
The number of properties purchased dropped 16 percent to
154,000.

Foreign buyers who were U.S. residents, either as recent immigrants or holding the appropriate visas, purchased
$41 billion in residential real estate, down 8 percent from the prior period.
Foreign buyers living abroad spent $33 billion, a 1 percent decrease. Those two
types of international buyers were responsible for 4 percent of the nation’s total
existing home sales of $1.7 trillion during that period.

“Foreign buyers and
recent immigrants have become less of a force in the U.S. housing market over
the last couple of years,” said NAR Chief Economist Lawrence Yun. “A lack of
housing inventory – the primary factor hindering domestic buyers – is also
holding back some foreign buyers. Additionally, less cross-border travel,
falling international trade and fewer foreign students attending American
universities are impacting foreign homebuyers.”

Persons from China and
Canada were the most prolific buyers of U.S. homes, spending $11.5 billion and $9.5
billion, respectively. Those countries have produced the most buyers every year
since 2013 although Chinese investment was down more than $2 billion from the
previous year. Mexico at $5.8 billion, India at $5.4 billion, and Colombia at
$1.3 billion rounded out the top five. Colombia replaced the United Kingdom as
the fifth largest country of origin by dollar volume of foreign buyers.

International buyers
spent a median of $314,600 on existing homes,15 percent more than the median
price of $274,600 for all such U.S. sales. NAR says the difference is due to the
location and type of properties purchased. The median purchase by Chinese
buyers, $449,500, reflects that more than half the properties were in either California
or New York.

“In the upcoming year,
better opportunities may become available for foreign buyers in large U.S.
cities like New York and San Francisco,”
said Yun. “New patterns of domestic
migration are trending away from expensive cities to more affordable suburbs
and small communities because of the pandemic and greater work-from-home
possibilities.”

Foreign buyers preferred
the suburbs to cities; 48 percent purchased in the former location versus 29
percent in an urban area, a trend has persisted for five years. Seven percent
bought in a resort area, down from 15 percent in 2009, and reflecting fewer
buyers from the United Kingdom and Canada who made many of those purchases.

The Sunbelt remains the preferred destination.
Florida led the list for the 12th straight year with 22 percent of
international purchases.  California
ranked second at 15 percent. Texas at 9 percent, New York at 5 percent, and New
Jersey at 4 percent completed the top five U.S. destinations.

Thirty-nine percent of purchases
were all-cash, with a higher percentage of those transactions, 58 percent, than
resident buyers at 27 percent. The highest share of all-cash purchases, 66
percent, were made by Canadian buyers while 40 percent of Chinese buyers also
paid cash. Asian Indian buyers were the least likely to pay all-cash at just 8
percent, and the most likely to obtain a mortgage at 87 percent.

Half of foreign buyers purchased the
property for primary residence use.
Three in four – 74 percent – purchased
detached single-family homes and townhouses.

Katie Johnson, NAR’s general counsel
and chief member experience officer said the association collaborates with local
Realtor groups to educate foreign buyers on the opportunities in U.S. real
estate and maximize the global business potential in local markets. “NAR and
the Realtor brand… has grown to a network of 104 real estate
associations across 85 countries, ensuring stable, accessible markets that
allow our members to make direct connections with global real estate
professionals and sources of foreign investment.”

By Jann Swanson , dated 2020-08-06 11:43:54

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Courtesy of Mortgage News Daily

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