Realtor® Survey Shows Decline in Foreign Investment in U.S. Residential Real Estate

Foreign InvestmentForeign Investment Down 36%

A decline in global growth and low housing inventory contributed to a drop in foreign investment in U.S. residential real estate over the past year.

This is according to an annual survey of residential purchases from international buyers, released today by the National Association of Realtors®, which found that foreign buyers purchased fewer U.S. existing homes from April 2018 through March 2019. Global economic growth, which increased in 2016 to 2017, slowed to 3.6% in 2018 and is on pace to taper to 3.3% in 2019.

NAR’s Profile of International Transactions in U.S. Residential Real Estate 2019 revealed that foreign buyers purchased $77.9 billion worth of U.S. existing homes from the 2019 survey reference period, a 36% decline from the level reached in the previous 12 months ($121 billion). Non-resident foreign buyers accounted for $33.2 billion of U.S. existing-home sales, a 37% decline from the prior level of $53 billion. Resident foreign buyers – that is, recent immigrants – purchased $44.7 billion of residential property, a 34% drop from the prior level ($67.9 billion).

The dollar volume of purchases saw a decline as the number of purchases, as well as the average price, decreased from the previous year, as foreign buyers purchased in comparison to the levels during the previous 12 months. Foreign buyers were able to buy 183,100 properties (266,800 in the previous period) at an average price of $426,100.

“A confluence of many factors – slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar and a low inventory of homes for sale – contributed to the pullback of foreign buyers,” said Lawrence Yun, NAR chief economist. “However, the magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.”

Top Foreign Buyers

For the seventh consecutive year, China exceeded all other countries in terms of dollar volume of purchases, buying an estimated $13.4 billion worth of residential property, a 56% decline from the previous 12 months. The Chinese economy is growing at a slower pace compared to past years, slowing to 6.3% in 2019 compared to 6.9% in 2017. The Chinese government has also tightened the monitoring of dollar outflows since 2016 to manage its foreign exchange reserves.

Following China, the next top foreign buyer for 2019 was Canada at $8.0 billion. While Chinese investors and Canadian investors tied concerning the number of purchases, on average, Chinese buyers bought properties at a higher price point. Therefore, China ranked ahead of Canada in terms of dollar volume.

The third top international buyer was India at $6.9 billion, the United Kingdom was fourth at $3.8 billion and in fifth was Mexico at $2.3 billion. Each of the top five buyers experienced a decline in the dollar volume of purchases.

International Buyers – Where Did They Go?

Following historical trends, Florida was at the epicenter of foreign investment. The state attracted 20% of foreign buyers. Forty-two percent of Canadians purchased property in Florida. “Many Canadians and other foreigners found Florida so enticing because of its lenient tax laws,” said Yun. “Additionally, many Florida metro areas have an inventory of cheaper properties, relatively speaking – a combination which makes the state a very popular destination.”

California followed Florida, accounting for 12% of international purchases. Thirty four percent of Chinese buyers purchased property in California, which represents a decline from one year ago.

The third most popular destination among international buyers was Texas (10%), particularly desirable among Indian and Mexican buyers.

Arizona accounted for 5% of international buyers, popular for Canadian and Mexican purchasers, followed by New Jersey (4%). New Jersey appealed to a mix of international buyers, especially those from the United Kingdom.

A few other significant destinations were North Carolina, Illinois, New York and Georgia. Each of these states accounted for 3% of all foreign buyers.

Price Points

Forty-four percent of foreign buyers purchased in a suburban area, while 76% purchased single detached family homes and townhomes.

  • The median purchase price for foreign buyers was $280,600, slightly higher than the $259,600 average for all U.S. existing homes sold. According to Yun, the price difference is a reflection of the choice of location and the kinds of properties desired by foreign buyers.
  • Eight percent of international buyers paid $1 million or more for their property, compared to just 3% of all U.S. existing homebuyers.
  • Resident foreign buyers – those living in the United States either as recent immigrants or those holding visas for professional, educational or other purposes – typically purchased properties at a slightly higher price point ($282,500) compared to non-resident foreign purchasers ($277,700).

“Even though numbers were lower this year than during the previous 12 months, international investors and buyers still spent and invested a great deal of money in U.S. real estate,” said NAR President John Smaby, a second-generation Realtor® from Edina, Minnesota and broker at Edina Realty. “Home buyers from across the globe know that the U.S. market is still a safe, secure and promising place to invest.”

The survey also showed that international buyers are more likely to purchase their homes in cash than all existing home buyers. Forty-one percent of the reported transactions were all-cash sales, in comparison to 21% for all existing-home purchases during the 2019 assessment reference period.

Non-resident foreign buyers are more likely to pay in cash than resident foreign buyers, who are more likely to acquire mortgage financing from U.S. sources. Sixty-three percent of non-resident foreign buyers had an all-cash purchase transaction, compared to 25% among resident foreign buyers.

Canadian buyers, who primarily live abroad, were the most likely to pay all cash (75%). The majority of Asian Indian buyers, most of whom resided in the U.S. as recent immigrants or visa holders, obtained a U.S. mortgage. Almost half of Chinese buyers made an all-cash purchase.

NAR’s 2019 Profile of International Transactions in U.S. Residential Real Estate was conducted April 5 through May 3, 2019. A sample of Realtors® was surveyed to measure the share of U.S. residential real estate sales to international clients, and to provide a profile of the origin, destination and buying preferences of international clients, as well as the challenges and opportunities faced by Realtors® in serving foreign clients. The survey presents information about transactions with international clients during the 12-month period between April 2018 and March 2019. A total of 11,812 Realtors® responded to the 2019 survey.

 

National Association of Realtors® July, 2019

Florida Housing Report: Sales, Median Prices Rise in April

florida housing market

Florida’s housing market reported more sales, higher median prices and increased inventory (active listings) in April compared to a year ago, according to the latest housing data released by Florida Realtors®. Sales of single-family homes statewide totaled 26,992 last month, up 6.2% over April 2018.

“Still-low mortgage interest rates and a strong jobs outlook are positive trends for Florida’s housing market,” says 2019 Florida Realtors President Eric Sain, a Realtor and district sales manager with Illustrated Properties in Palm Beach. “Another strong sign: New pending sales for existing single-family homes in April rose 4.4% year-over-year, while pending sales for existing condo-townhouse properties remained at about the same level (-0.8%) as April 2018.

“Buying or selling a home can be a complex process; however, working with a Realtor who understands local market conditions enables consumers to have an expert on their side.”

In April, statewide median sales prices for both single-family homes and condo-townhouse properties rose year-over-year for the 88th consecutive month. The statewide median sales price for single-family existing homes was $259,470, up 2.6% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $194,050, up 2.1% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in March 2019 was $261,100, up 3.8% from the previous year; the national median existing condo price was $244,400. In California, the statewide median sales price for single-family existing homes in March was $565,880; in Massachusetts, it was $390,000; in Maryland, it was $285,000; and in New York, it was $270,000.

Looking at Florida’s condo-townhouse market in April, statewide closed sales totaled 11,817, up 3.2% compared to a year ago. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

“April was easily the strongest month we’ve seen so far this year for home sales in the Sunshine State,” says Florida Realtors Chief Economist Dr. Brad O’Connor. “Prior to April, single-family closed sales for 2019 were actually down year-over-year, but with April’s little surge (up 6.2%), sales in 2019 are now up by 1% compared to where we were through the first four months of 2018.

“The statewide inventory of active listings continued to rise on a year-over-year basis in April, but the rate of this growth continues to slow somewhat. As of the end of April, there were about 95,000 single-family homes listed in Florida’s MLSs (Multiple Listing Services) or 6.6% more than were listed at the same time last year. The total of active listings of condos and townhouses was closer to about 58,500, up 6.4% compared to last year.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.47 percent in April 2019, compared to the 4.14 percent averaged during the same month a year earlier.

FloridaRealtors.org May 21, 2019

Most Home Sales in Southwest Florida Still Cash

cash sales SarasotaCash buyers remain major players in the Southwest Florida housing market.

The Sarasota-Manatee area ranked fifth among the largest U.S. metro areas for cash home sales at the end of 2015, according to a new report by data provider CoreLogic.

Cash sales accounted for 51 percent of all home deals in the two counties, CoreLogic said, reinforcing other reports that buying without borrowing is still the most popular way to acquire residential real estate here.

That was up from 47.2 percent in September, but down from 54.3 percent one year earlier.

Cash buyers have dominated the regional real estate market for several years, even leading the nation for the top share early last year.

While the impact of large institutional investors — who dominated the market during its early rebound — has slowed, smaller investors have become more active. Baby boomers at or near retirement also are selling homes up north and paying cash for homes here.

Florida tied for third nationally for the share of cash sales at 46 percent, CoreLogic said.

Nationwide, cash sales made up 33.4 percent of all homes sales in December and 33.9 percent for the full year, the lowest annual level since 2008.

“The cash sales share peaked in January 2011, when cash transactions accounted for 46.6 percent of total home sales nationally,” CoreLogic said. “Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent.

“If the cash sales share continues to fall at the same rate it did in December 2015, the share should hit 25 percent by mid-2017,” it said.

Herald Tribune March 24, 2016