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Chinese and Canadians are top foreign investors in U.S. real estate

07/18/2017

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Foreign buyers and recent immigrants have spent a record-breaking $150.3 billion on U.S. residential real estate, and that only accounts for purchases made from April 2016 to March 2017, according to the National Association of Realtors’ (NAR) 2017 Profile of International Activity in U.S. Residential Real Estate.

This is a 49 percent year-over-year increase from 2016, and easily breaks the previous high of $103.9 billion in 2015. Overall, international buyers bought 284,455 homes, which accounts for 10 percent of the dollar volume of existing-home sales.

“The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of U.S. property over the past year,” said NAR Chief Economist Lawrence Yun in a statement.

“While the strengthening of the U.S. dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work and invest.”

China accounts for most investment spending

China maintained the no. 1 spot in sales dollar volume for the fourth consecutive year. Chinese buyers spent $31.7 billion dollars on residential real estate — $3.1 billion more than the previous high ($28.6 billion) in 2015. Although China accounted for the most investment spending, Canada is quickly catching up after a lull in 2016.

Transactions from Canadians totaled $19 billion, a new high for our neighbors to the north. Yun says the re-energized interest in U.S. residential real estate comes from the exorbitant home prices seen in Canada, especially in the heavily populated and popular cities of Toronto and Vancouver.

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“Inventory shortages continue to drive up U.S. home values, but prices in five countries, including Canada, experienced even quicker appreciation,” Yun said.

“Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the U.S. and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future.”

Where are foreign buyers buying?

On average, foreign buyers paid $302,290 — a 9 percent year-over-year increase from the 2016 median sales price ($277,380) and $41,588 more than the sales price of all existing homes sold during the same period. Approximately 10 percent of foreign buyers paid over $1 million, and 44 percent of transactions were all-cash purchases, a 6 percentage point dip from 2016.

Florida (22 percent), California (12 percent) and Texas (12 percent) remain the top destinations for foreign buyers. Canadian buyers favored Florida while Chinese buyers favored California. Meanwhile, Mexican buyers favored Texas when purchasing U.S. residential property.

Yun says he expects foreign investment in U.S. residential real estate to keep growing. But housing issues such as low inventory, rising prices and the current international political landscape could make buyers go elsewhere.

“Stricter foreign government regulations and the current uncertainty on policy surrounding U.S. immigration and international trade policy could very well lead to a slowdown in foreign investment,” said Yun.

Email Marian McPherson.

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