Loosening pandemic restrictions were expected to prompt an influx of foreign buyers in the housing market, but other factors are keeping international purchasers away.
Foreign buyers bought $53.3 billion of existing homes in the United States between April 2022 and March 2023, according to a report from the National Association of Realtors. The volume represents a year-over-year decrease of 9.6 percent.
Spending wasn’t the only thing trending down from last year — the number of purchases also dropped. There were 84,600 homes bought by foreign buyers over the same period, down 14.2 percent from the previous year. It was the fewest number of homes bought by foreign buyers since NAR started tracking the metric in 2009.
However, the 23 percent decline posted by U.S. existing-home sales in the same period outpaced the decrease among foreign buyers, as noted by the Wall Street Journal.
As international travel recovers, pandemic-era restrictions are no longer the obstacle to the housing market they once were for international homebuyers. Instead, it’s low housing inventory and higher borrowing costs — the same factors dogging the buyer pool at-large in the country — dragging down sales with international buyers, according to NAR chief economist Lawrence Yun.
The findings are based on a survey NAR conducted with its ranks regarding international clients.
Foreign buyers were still leaning into the upper end of the housing market, notching records for average and median existing-home sales prices in the category, up 7 percent and 8.3 percent, respectively. The median sale of $396,400 was $12,000 above the median of the overall housing market in the same period.
An annual tradition now 15 years running, Florida once again proved the top destination for international buyers, accounting for 23 percent of foreign purchases. California and Texas tied for second at 12 percent each; no other state recorded a share of at least 5 percent.
China and Canada repeated their gold and silver medal positions, respectively, in terms of sales dollar volume. Chinese buyers spent $13.6 billion — more than doubling last year’s mark — while Canadian buyers spent $6.6 billion. Other leading countries included Mexico ($4.2 billion), India ($3.4 billion) and Colombia ($900 million).
Even though borrowing costs are hampering transactions, international buyers are still more immune to them than the rest of homebuyers. Approximately 42 percent of international purchases were all-cash deals, versus 26 percent for the overall housing market.
One factor that can affect this report in a year is the movement by states — most prominently Florida and Texas — to restrict real estate activity of foreign nationals. In the spring, Florida Gov. Ron DeSantis signed a law that banned nearly all purchases by Chinese nationals and China-based companies, as well as purchasers from “countries of concern,” including Russia and Venezuela.
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