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Foreign purchases of US homes plunge 36% as Chinese buyers stay away
[BOSTON] Foreign purchases of US residential real estate in dollar terms fell 36 per cent to the lowest annual rate since 2013, as slowing overseas economies, the strong dollar and the White House's anti-immigrant rhetoric put a chill on demand.
Foreign buyers spent US$77.9 billion on homes in the US during the 12 months ended March 31, down from US$121 billion during the same period a year earlier, according to the National Association of Realtors' annual survey on international transactions.
China made up the biggest segment of foreign buyers, followed by Canada, India, the UK and Mexico.
But purchases by Chinese buyers sank 56 per cent to US$13.4 billion from a year earlier - comparatively the biggest percentage drop of all foreign buyers. This was thanks to its weakening economy and government restrictions on outbound investments, according to the survey.
CNBC reported that Chinese buyers may also be souring on US real estate due to the current political climate. It said that anecdotally, real estate agents in California have seen a pullback in Chinese buyer demand. Southern California had been especially popular with Chinese parents hoping to send their children to American colleges.
The data include foreigners who reside outside the US and those who are recent immigrants or temporary visa holders. Non-resident buyers spent US$33.2 billion while new arrivals bought US$44.7 billion. Foreign buyer purchases peaked in the period ended March 31, 2017, at US$153 billion.
For an overseas buyer, a US home isn't the bargain it once was, with rising prices and foreign currencies losing value against the dollar. Making matters worse, global economies have cooled, from China to Europe and Canada. But psychology may also be at play. It's likely that the Trump administration's anti-immigrant rhetoric and trade wars may be keeping some people away, chief economist Lawrence Yun said.
"The decline is such a large magnitude that it can't be explained purely by economic factors," Yun said. "We will have to wait to see whether this is a new normal with more subdued activity, or is it a one-year situation where things bounce back."
The top destinations were Florida, which accounted for 20 per cent of foreign purchases, followed by California, Texas, Arizona and New Jersey, the report said. Foreign buying in California fell to 12 per cent from 14 per cent a year earlier. It was as high as 17 per cent in 2013.