Listen to this articleThe number of existing U.S. residential properties purchased by international buyers has dropped to a 15-year low, according to a new report from the National Association of Realtors.
There were 54,300 existing homes sold to foreign buyers between April 2023 and March 2024, the lowest since NAR began tracking the stat in 2009 and down 36 percent from the previous year.
In terms of dollars, foreign investment in existing U.S. homes totaled about $42 billion, a decline of 21.2 percent from the prior year. That’s despite the average ($780,300) and median ($475,000) purchase prices for foreign buyers being the highest ever recorded by NAR.
Canada, China, Mexico and India were the top countries of origin for buyers by the number of U.S. existing homes purchased. The top state for foreign buyers of existing residential properties was Florida, accounting for about 20 percent of all international purchases. Texas was the next most popular destination for foreign homebuyers with 13 percent of international sales, followed by California with 11 percent and Arizona with 5 percent. New York, New Jersey, North Carolina and Georgia each accounted for 4 percent of existing home sales by foreign buyers, according to the NAR report.
The slowdown in international homebuyers has also been felt on Long Island, where foreign buyers have been active in the luxury real estate market. In 2016, LIBN reported that nearly half of home sales of $5 million or more in Nassau County were purchased by buyers from other countries.
Maria Babaev, a top producing broker with Douglas Elliman Real Estate in Roslyn, is quite familiar with international buyers. After growing up in Moscow, Babaev came to the U.S. and became an account manager for Citigroup’s emerging markets division, guiding the portfolios of 130 banks and financial institutions in places like Russia, Ukraine and Kazakhstan. Switching to real estate more than 20 years ago, she has represented numerous international clients and has developed a pipeline of foreign investors and buyers.
Babaev said there are several factors for the recent decline in foreign homebuyers.
“There’s global economic slowdown, the dollar is very strong, so the currency exchange rates play a role in the situation. The increase in interest rates, even for luxury transactions, also contributes to that,” she said. “I think it all started with COVID-19 with the travel restrictions and changing the overall order of the world. Geopolitical factors, all of this contributes, not to mention very low inventory. Even for local and national buyers there’s not much to buy and so that’s another contributing factor in the decline in transactions in general, including with international buyers.”
NAR Chief Economist Lawrence Yun said the strong U.S. dollar makes U.S. homes much more expensive for foreigners. “Therefore, it’s not surprising to see a pullback in U.S. home sales from foreign buyers,” he said.
Foreign buyers who resided in the U.S. as recent immigrants or who were holding visas that allowed them to live in the U.S. purchased $22.6 billion worth of U.S. existing homes from April 2023 to March 2024, a 3.4 percent decline from the previous year and representing 54 percent of the dollar volume of foreign purchases. Foreign buyers who lived abroad purchased $19.4 billion worth of existing homes, down 35 percent from the previous 12 months, accounting for 46 percent of the dollar volume.
About half of international buyer transactions were all-cash sales, compared to 28 percent of all existing-home buyers. About 69 percent of Canadian buyers and 68 percent of Chinese buyers made all-cash purchases, which was the highest shares of all-cash transaction among the top foreign buyer nations, according to the NAR report.
Despite the recent pullback, Babaev remains bullish on international homebuyers, especially once the inventory grows and interest rates drop.
“When they’re ready to move their families to this country, they’re looking for properties on the North Shore of Long Island for example, because we have infrastructure, we have a beautiful lifestyle that this area has to offer, but more importantly we have award-winning school districts and some of the best in the nation, so all of this is a driving force,” she said. “Overall, I am very optimistic. The U.S. continues to be a safe haven and international buyers still invest a substantial amount of money in U.S. real estate. Yes, numbers are down, but there’s still billions of dollars that are being invested by buyers from China, from Canada and other places. The U.S. market remains very safe, secure and promising place for foreign investment.”