Foreign homebuyers purchased fewer homes last year, a new study found, the lowest level since 2009, as the housing market faces an overall decline.
The plunge in sales underscored the severe state of the domestic housing market, as buyers across the board have faced low inventory, which has kept prices high.
Foreign buyers in total, invested $53.3 billion in real estate, which was 9.6 percent less compared with the previous year.
High mortgage rates, a surge in home prices, a contracting supply of homes for sale, and a strong dollar, have all made U.S. real estate less financially attractive overseas.
The popular 30-year mortgage rates are currently more than twice what they were in 2021.
The surge in mortgage rates has made homeowners more reluctant to sell their homes, since they bought their homes at lower mortgage rates, exasperating the low inventory of existing properties on the market.
New home construction has not been enough been enough to fill the housing shortfall, as new units fell 14 percent from a year ago.
Single-family inventory, fell to 960,000 in June, the lowest recorded for that month since NAR began collecting data for it in 1982.
“Sharply lower housing inventory in the U.S. and higher borrowing costs across the world have dented international buyers for two straight years,” said NAR chief economist Lawrence Yun.
Foreign Nationals Continue to Buy American Housing
Although overseas buyers bought fewer homes in recent months, they were still willing to pay more for them.The median purchase price for non-American buyers was $396,400, while the average sales price was $639,900, up 8.3 percent and 7 percent respectively, for the highest numbers on record, according to NAR.
Fifteen percent of international homebuyers purchased homes worth more than $1 million during the period, the study found.
International clients paid out about $12,200 more on a home than domestic buyers and often targeted popular coastal areas, often in cash.
NAR reported that 42 percent of foreign buyers bought properties in cash, compared with 26 percent of the total market.
Non-resident foreign buyers accounted for 52 percent of all cash purchases, in contrast to resident foreign buyers, who stood at 32 percent.
Nearly half of non-citizen buyers bought properties as vacation homes, rentals, or both, compared with 16 percent of all existing homebuyers.
Asians and Latin Americans Dominate List of Overseas Buyers
China, Mexico, Canada, India, and Colombia were the top five countries of origin for international buyers of existing homes by number of houses, not volume of dollars.Asian buyers accounted for 38 percent of all international buyers and Latin American buyers accounted for 31 percent, according to NAR.
The majority of buyers came from China, which made up at least 13 percent of foreign buyers with a total of $13.6 billion in purchases.
Chinese buyers tended to target expensive markets like California and New York, leading to the most spent by any nationality for a home, with an average purchase price of $1.23 million and a median purchase price of $723,200.
California is a popular market as wealthy parents in China prefer to send their children there to attend local schools and universities.
“Home purchases from Chinese buyers increased after China relaxed the world’s strictest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” Mr. Yun said.
In contrast, Mexican buyers tended to purchase the cheapest properties in the United States with Texas as the most preferred location.
Mexicans made up 11 percent of all residential sales to foreigners, having invested about $4.2 billion in properties.
“A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers,” noted Mr. Yun.
Canadians were the third-largest population of foreign buyers and came in second for the most spent on a home at an average of $572,900.
Buyers from there made up 10 percent of all foreign buyers and invested $6.6 billion in real estate.
Canadians were also more likely to purchase homes in vacation destinations such as Florida and Arizona.
India and Colombia rounded out the top foreign buyers list, consisting of 7 percent and 3 percent of purchases, respectively.
Florida remained the top destination for foreign buyers for the 15th year in a row, accounting for 23 percent of all international purchases.
California and Texas tied for second, at 12 percent each, followed by North Carolina, Arizona, and Illinois, at 4 percent each.
Florida Cracks Down on Chinese Property Purchases
Meanwhile, a new law in Florida is making it more difficult for buyers from certain countries to buy properties in the Sunshine State.Florida Gov. Ron DeSantis enacted a new law that barred citizens of Cuba, Venezuela, Iran, Russia, China, North Korea, and Syria from purchasing agricultural land in the state, as well as real estate within 20 miles of airports, U.S. military installations, or other “critical” infrastructure facilities, for security purposes.
Mr. DeSantis called the new law part of the state’s strong commitment to “crack down on Communist China,” calling Beijing a “great geopolitical threat.”
Chinese nationals who buy land in restricted areas are facing the toughest restrictions out of all foreign nationals, which has sparked a lawsuit from the left-wing ACLU.
Citizens of that nation who purchase property in restricted areas could face felony charges, while buyers and sellers from other countries could face a misdemeanor.
Chinese who already own property in restricted areas also must register with the state, or face fines of up to $1,000 per day.
Properties or land could be seized if their owners fail to comply, lawmakers said.
Civil rights activists called the Florida law, which went into effect on July 1, unconstitutional and a violation of the Fair Housing Act, which protects homebuyers from discrimination based on race or national origin.
