Foreign home investments hit a snag in the United States for the first time since 2011, according to the annual report from the National Association of Realtors (NAR).
Foreign buyers purchased $54.4 billion worth of U.S. existing homes from April 2020 through March 2021, a 27% decrease from the previous year, according to NAR’s 2021 International Transactions in U.S. Real Estate report.
Global buyers bought 107,000 properties in the U.S., down 31% from the prior year, as the COVID-19 pandemic led to a strong global economic contraction and a decline in international tourist and business arrivals. The sales volume and number of properties sold are the lowest in 10 years. Those figures were $66.4 billion and 210,800 properties, respectively.
NAR Chief Economist Lawrence Yun said even with the drop in homes purchased from international buyers, there are some positives to examine when it come foreign home investments.
“The big decline in foreign purchases of homes in the U.S. in the past year is no surprise, given the pandemic-induced lockdowns and international travel restrictions,” Yun said. “Yet, even with the absence of foreign buyers, the U.S. housing market strengthened solidly.”
Top countries purchasing
Despite a decline in U.S. homes purchased by foreigners, Canada, Mexico, India, China and the United Kingdom remained in the top-five homes as foreign buyers.
- Canada and China remained first and second in U.S. residential sales dollar volume at $4.5 and $4.2 billion.
- The U.K. was the only country among the top five to see an increase in dollar volume from the previous year ($1.4 billion to $2.7 billion).
- The annual dollar volume dropped by at least 50% for foreign buyers from China ($4.5 billion from $11.5 billion), Canada ($4.2 billion from $9.5 billion) and Mexico ($2.9 billion from $5.8 billion).
The states that attracted the most foreign buyers were Florida, Texas, California, Arizona, New York and New Jersey.
For the 13th straight year, Florida remained the top destination for foreign buyers, accounting for 21% of all international purchases. California ranked second (16%), followed by Texas (9%) and Arizona (5%), with New Jersey and New York tied at 4%.
Cash sales accounted for 39% of international buyers transactions.
- Non-residents purchased homes at 61%
- Residents purchased homes at 24%
- More than four out of five buyers from the United Kingdom – 82% – made all-cash purchases, the highest share among foreign buyers.
- Asian Indian buyers were the least likely to pay all-cash at just 8%. Two-thirds of Canadian buyers (66%), two out of five of Chinese buyers (40%), and a third of Mexican buyers (33%) made an all-cash purchase.
As more states adjust their mandates, these numbers could look very different next year. Countries are likely to be more aggressive in investing in U.S. homes and foreign home investments should rise.