There’s a surprising amount of competition in the housing market this summer—even as the coronavirus pandemic rages on. But buyers aren’t likely to find themselves sparring with foreign shoppers and investors.
The number of purchases from international buyers dropped 16% compared with last year, as they closed on just 3% of existing homes (previously lived-in residences), according to a recent National Association of Realtors® report. They spent about $74 billion in total on their purchases, down 5% from the previous year.
“Foreign buyers stepping back a bit is good news for domestic buyers, who have a better chance of getting the property [they want,]”
says NAR’s chief economist, Lawrence Yun.
The NAR report is based on a survey of 11,615 Realtors conducted from May 21 through June 24. It measured sales to foreign buyers who live in the United States, such as recent immigrants and visa holders, who made up nearly two-thirds of the sales measured in the report, as well as those who reside abroad. The sales were conducted from April 2019 through March 2020.
Only existing homes were included in the report, which did not measure sales of newly constructed residences.
“Even before COVID-19, international travel had been falling, especially from China. The dollar is a little stronger, which makes U.S. properties more expensive,” says Yun.
But the main reason, he says, that foreigners “decided not to buy was the lack of inventory, the same reason as for domestic buyers.”
Foreign buyers hailed primarily from China, spending about $11.5 billion on U.S. residential real estate. They were followed by Canadians, who dropped about $9.5 billion; Mexicans, at $5.8 billion; Indians, at $5.4 billion; and Colombians, at $1.3 billion.
Where and what kinds of homes are foreign buyers purchasing?
International buyers bought the most property in Florida, where 22% of their purchases were made. The Sunshine State was followed by California, at 15%; Texas, at 9%; New York, at 5%; and New Jersey, at 4%.
They also spent a little more on average for the homes they bought than native-born Americans. Foreign buyers forked over a median $314,600 on U.S. real estate—compared to $274,600 for all of the other existing homes sold during the same period. About 8% of their purchases were for $1 million or more.
And they weren’t only interested in the big, glamorous cities on the coasts.
About half of these purchases were used as their primary residences. Nearly three-quarters closed on detached, single-family homes or townhomes. Just under half of those were in suburban areas.
International buyers were also more likely to make all-cash offers. About 39% paid in cash, compared to 19% of all of those who bought existing homes.
“Foreigners tend to be all cash. It’s more difficult to compete against cash,” says Yun. “There’s such strong demand from domestic buyers and a lack of inventory, so foreign buyers not being as active is a blessing for domestic buyers.”