Foreign investors have a history of flooding the U.S. real estate market with billions of dollars, but lower housing inventory and more expensive borrowing costs have caused them to pull back.
Foreign buyers bought $53.4 billion worth of existing U.S. homes from April 2022 through March 2023, down 9.6% from the previous 12-month period, according to a report from the National Association of Realtors (NAR).
Foreign buyers purchased 84,600 properties, down 14.2% from a year ago and the fewest number of homes bought since 2009 when NAR began tracking the data.
“Sharply lowering housing inventory in the U.S. and higher borrowing costs across the world have dented international buyers for two straight years,” NAR Chief Economist Lawrence Yun said. “However, recovering international travel following the end of the pandemic will bring more foreign transactions in the coming months and years.”
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Half of the foreign buyers purchased their properties to use as vacation homes, rental property or both — up from 44% from the previous year.
And 42% of them paid cash, compared to 26% of all existing homebuyers. Colombian purchasers accounted for the highest share of all-cash buyers at 67%, and about half of Canadian and Chinese buyers made all-cash purchases. Asian-Indian buyers were the least likely to pay cash at just 15%.
Chinese buyers were the top investors in U.S. residential properties with a sales dollar volume of $13.6 billion, followed by Canadian investors at $6.6 billion. Rounding out the top five were Mexico at $4.2 billion; India at $3.4 billion and Colombia at $900 million.
“Home purchases from Chinese buyers increased after China relaxed the world’s strictest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” Yun said. “A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers.”
Florida remains the top destination for foreign buyers, accounting for 23% of international purchases. California and Texas tied for second with 12% each, followed by North Carolina, Arizona and Illinois at 4% each.
“Florida, Texas and Arizona continue to attract foreign buyers despite the hot weather conditions during the summer and the significant spike in home prices that began a few years ago,” Yun said.
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