US Foreign Property Purchases Dropping

Foreign property purchases in the US have fallen sharply over the last year due to rising property prices and a low inventory of available property to purchase.

The latest figures from the National Association of Realtors (NAR) showed that international sales by foreign property buyers between April 2017 and March 2018 were down by 21 per cent year-on-year to 121 billion dollars.

The NAR’s 2018 Profile of International Transactions in U.S. Residential Real Estate showed that overseas property investors and recent immigrants accounted for 8 per cent of the total existing home sales, a decrease from 10 per cent during the 12-month period that ended March 2017

Foreign property purchasers’ activity in the country has been mostly limited to three U.S. states, namely, Florida (19 per cent), California (14 per cent) and Texas (9 per cent).

The main five countries providing foreign property purchasers in the US were China, Canada, Britain, India and Mexico, who between them accounted for 49 per cent of all transactions involving foreign property buyers.

Overseas property investors were found to purchase more expensive properties than the norm, with a median price for a foreign buyer standing at 292,400 dollars, 17 per cent higher than the median price for all existing property purchases.

Lawrence Yun, NAR’s chief economist, commented: ‘After a surge in 2017, we saw a decrease in foreign activity in the housing market in the latest year, bringing us closer to the levels seen in 2016.

‘Inventory shortages continue to drive up prices and sustained job creation and low interest rates mean that foreign buyers are now competing with domestic residents for the same, limited supply of homes.’

However, NAR President Elizabeth Mendenhall was upbeat, saying: ‘The saying goes that all real estate is local, but that does not mean that all buyers are. Even in this current global environment of political uncertainty, the U.S. real estate market continues to be seen as a safe, secure and profitable place to invest in property.’