China’s currency controls, as well as international tensions between the U.S. and a slew of countries traditionally thought of as our allies, are putting a crimp on America’s real estate market by thwarting demand from foreign homebuyers.
Purchases by Chinese people, the biggest share of foreign buyers, plummeted 56% in the 12 months ended in March, while British home purchases tumbled 48%, according to a report from the National Association of Realtors. Chinese people bought $13.4 billion of American homes during the 12 months ended in March, compared with $30.4 billion a year earlier.
Canadians, the next-largest group of foreign buyers, purchased $8 billion of homes, compared with $10.5 billion a year earlier. Buyers from India were No. 3, with $6.9 billion of purchases, down from $7.2 billion. The U.K. was No. 4, but saw the second-biggest decline: Brits purchased $3.8 billion of homes, down from $7.3 billion a year earlier. Mexico was No. 5, at $2.3 billion, a decline of 45% from $4.2 billion a year earlier.
Measuring all foreign purchases, the total dollar volume plummeted 36% to $77.9 billion, according to the report. Foreign buyers paid a median price of $280,600, about 8% higher than the median for all existing homebuyers.
The rankings of the states that got the biggest share of foreign purchases remained the same as in past years: Florida was first, followed by California, Texas, Arizona and New Jersey.
Other tidbits from the report include: 41% of foreign buyers paid all-cash, compared with about 20% for the overall market. Also, 76% of foreigners purchased a single-family home or townhome, and 44% purchased a property in a suburban area.
Purchases from foreign buyers who reside abroad accounted for 1.4% of all existing home sales in the 12 months ended in March, down from 1.9% in the year-earlier period, according to the NAR report. That type of foreign buyer – whose primary residence is in another country – represented about 40% of foreign home purchases, the report said.
The bigger share – 60% – were buyers who either were recent immigrants or foreigners who live in the U.S. for work, school or other reasons. While only 25% of non-resident foreign buyers used a mortgage for the purchase, about 67% of resident foreign buyers got a mortgage, according to the report. The rest paid in cash.