Chinese buyers led international home purchases in the U.S. for the second year in a row, according to the National Association of Realtors (NAR).
Buyers from China bought 29,195 properties worth a total $27.3 billion, surpassing all other foreign-purchaser groups in the number of units and dollars spent, NAR found in its 2016 Profile of International Activity in U.S. Residential Real Estate. The report is based on a survey of about 6,000 real estate agents covering transactions during the period from April 2015 through March 2016.
Chinese buyers’ increased activity, which represents 26.7% of the total dollar volume of international sales — higher than purchasers from the next top four countries combined — speaks of the Asian country’s “ability to hold on” amid slower economic growth at home and across the globe, and the strengthening of the U.S. dollar, said Lawrence Yun, NAR chief economist. Mr. Yun also noted that while the yuan is still weaker than the greenback, the Chinese currency is actually stronger today than it was five to 10 years ago.
Overall dollar volume is down; unit sales are up
Economic upheaval and the appreciation of the dollar, however, did push overall international sales slightly down, to a total of $102.6 billion, a 1% decrease from the previous 12-month period. In number of units, however, sales went up 3% to 214,885.
The opposite happened last year, when the number of properties decreased as the dollar value increased.
NAR attributes the difference to fewer number of non-resident foreign buyers in the most recent 12-month period. These buyers tend to purchase more expensive properties — paying on average $491,427 per unit compared with the U.S. average sale price of $266,683. This time around, non-residents accounted for 41% of all international buyers, down from almost 50% in the previous years.
“We did expect foreigners to be weaker because of the U.S. dollar,” Mr. Yun said.
International buyers who are U.S. residents increased their purchases from an estimated 109,600 units worth a total $49 billion between April 2014 and March 2015, to 126,300 units worth $59 billion in the following 12-month period. For their part, international purchasers living abroad decreased their bets on U.S. property from 99,400 units worth $54 billion to 88,500 properties worth $44 billion during the same time period.
Half of all the reported international transactions were paid in cash.
U.K. buyers spent more, but Brexit may take its toll
In terms of dollar volume, Canadians represented 8.7% of all international sales, down from 10.8% last year and sharply lower than 25.9%, their share in 2010, when NAR issued the first annual survey of this kind. Canadians spent $8.9 billion, compared with $11.2 billion in 2015 and $17.1 billion in 2010.
Buyers from India came in third, accounting for 6% of total dollar volume, with $6.1 billion worth of properties. U.K. buyers were fourth, with 5.3% and a total of $5.5 billion. Completing the top five foreign markets was Mexico, whose nationals made up 4.6% of total dollar volume with $4.8 billion worth of properties.
All top countries saw their dollar volume share decrease from last year’s survey, with the exception of the U.K.
Mr. Yun attributed this to a combination of higher growth in home prices in the U.K. than in the U.S. and a steady strong pound against the U.S. dollar. However, “after Brexit everything is turned around” and it is yet to be seen what the full fallout of the referendum will be in the next year, he said.
Last year, U.K. buyers spent a median of $427,348 per U.S. homes, surpassed only by the Chinese, who paid a medium price of $542,084.
As far as where all this money is going, 51% went to five states: Florida kept the crown with 22% of international sales, followed by California (15%), Texas (10%), Arizona (4%) and New York (4%).
The list of top buyers is very similar to the one of top foreign sellers, led by Canadians, who apparently saw in the stronger dollar an opportunity to cash in on their U.S. real estate investments, according to NAR.
Looking forward, a majority of real estate agents surveyed said they are optimistic, one reason being that U.S. home prices are often perceived to be more affordable compared to home country prices.
However, if uncertainty surrounding Great Britain’s exit from the European Union impacts global economic growth, demand for U.S. real estate could fall, the report stated.
Top Five Countries Among Foreign Buyers, By Dollar Volume
|Country||2016 Dollar Volume
|2015 Dollar Volume
|# of Properties
Purchased in 2016
|# of Properties
Purchased in 2015
Source: National Association of Realtors
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