International buyers looking to invest in America’s residential real estate market have slipped 9.6 percent from last year, according to the latest report from the National Association of Realtors (NAR). From April 2022 through March 2023, foreign buyers bought 84,600 properties across the country, representing a 14.2 percent decrease from the previous year and also the fewest number of homes purchased since 2009.
While those purchases totaled $53.3 billion worth of U.S. properties, NAR chief economist Lawrence Yun blames sparse inventory and rising interest rates for the unprecedented decline. “Sharply lower housing inventory in the U.S. and higher borrowing costs across the world have dented international buyers for two straight years,” said Yun. “However, recovering international travel following the end of the pandemic will bring more foreign transactions in the coming months and years.”
NAR reported the median purchase price nationwide at $396,400, the highest ever recorded. China was the top buyer at $13.3 billion, followed by Mexico at $4.2 billion. Canada, India, and Columbia rounded out the top five international buyers.
Chinese buyers were also responsible for the highest average purchase prices at $1.2 million and the highest median purchase price at $723,000. “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,” Yun added. “A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers.”
Similar to previous years, the top U.S. destinations remained in states with warmer climates in the South and West. For the 15th consecutive year, Florida was the top destination, with 23 percent of all international purchases. California and Texas tied for second place at 12 percent, while North Carolina and Arizona held third place, with both representing 4 percent of sales.
Courtesy of Berkshire Hathaway Homeservices California Properties
All cash sales were reported by 42 percent of foreign buyers, and 50 percent of all international buyers purchased a property for use as a vacation home, rental, or both. Colombian buyers comprised the largest group of cash buyers at 67 percent, while almost half of the Canadian and Chinese buyers offered cash payments.
The majority of all foreign buyers—59 percent—purchased detached single-family homes, whether living abroad or in the United States. Foreign buyers living overseas were more likely to purchase a townhome, compared to global buyers who live in the United States. Canadians were most likely to buy a condominium in a resort area for vacation use.
In terms of international home prices, the NAR report indicates the City of Hong Kong is the most expensive, with an average cost per square meter of $28,570. London was close behind with its average price per square meter at $26,262. While New York remains one of the most expensive cities in the world, its average square meter cost is almost $10,000 less at $17,191. Denmark is named the least expensive global city, with a $5,306 average square meter price.
A recent report by Juwai IQI, a global real estate technology group, echoed NAR’s findings on global residential real estate purchases in the United States. In the report, the United States was named as the world’s fourth most popular country for Chinese buyers, dropping from number three in 2022.
Juwai IQI Co-Founder and Group CEO Kashif Ansari agrees with NAR’s theory on the decline of U.S. real estate popularity: lower inventory and higher interest rates. “There were fewer houses to purchase, and getting a mortgage was more expensive, discouraging buyers,” Mr. Ansari told The Epoch Times. “While the U.S. fell to the fourth most popular destination for Chinese buyers, Chinese purchases in the U.S. still soared from $6.1 billion in last year’s report to $13.6 billion in this year’s report.”
As for the U.S. regaining its top spot among Chinese and other foreign nationals, Mr. Ansari believes things are still in flux. “The U.S. could climb back up the list later this year or in 2024,” he predicted. “Travel capacity is still only about half of the pre-COVID level, and group travel has been available to just a handful of countries for most of that time.”
