According to a recent report from the National Association of Realtors (NAR) in the United States, foreign real estate buyers purchased $42 billion worth of existing homes in the U.S. from April of last year to March of this year, a decrease of 21.2% compared to the previous year. The number of existing homes sold to foreign buyers was 54,300, a 35.8% decrease from the 84,600 sold in the previous year, marking the lowest record since NAR began tracking this data in 2009.
Among all international home transactions, Canadians accounted for the largest number of home purchases by foreign buyers at 13%, followed by China and Mexico (11%), with India ranking fourth at 10%. While Chinese buyers purchased fewer existing homes compared to Canadians, they topped the list in total purchase price at $7.5 billion, significantly higher than Canada ($5.9 billion), India ($4.1 billion), and Mexico ($2.8 billion).
International buyers primarily consist of Type B buyers, foreign residents in the U.S., and Type A buyers, non-residents living outside the U.S. Resident buyers purchased a total of $22.6 billion in existing homes, a 3.4% decrease from the previous year, accounting for 54% of the total purchase amount; non-resident buyers purchased $19.4 billion in existing homes, a 35% decrease from the previous year, representing 46% of the total transaction amount. The total purchase amount by international buyers represents about 2% of the total $2.1 trillion existing home transaction volume in the U.S.
According to NAR data, international buyer transactions currently account for only 1.3% of existing home sales in the U.S. annually, with half of international buyers paying in cash. In contrast, all-cash transactions for existing homes in the U.S. account for only 28% of total transactions.
The highest proportion of all-cash buyers in Canada and China accounts for 69% and 68%, respectively, of buyers in each country.
Chinese buyers have the highest average purchase price for existing homes among all international buyers at $1.3 million; the average transaction price for international buyers buying existing homes is $780,000, with a median home price of $475,000, setting a record high in NAR history, representing increases of 21.9% and 19.8% from the previous year, respectively.
Florida is the top destination for international buyers, accounting for 20% of foreign home purchases, followed by Texas (13%), California (11%), Arizona (5%), Georgia, New Jersey, New York, and North Carolina each accounting for 4%. Among Chinese buyers, 25% purchased homes in California.
NAR’s Chief Economist Lawrence Yun believes that international real estate buyers, like American buyers, face challenges such as inventory shortages, high mortgage rates, and affordability issues. In addition, international buyers also face adverse effects from the strength of the U.S. dollar.
Typically, the most common challenge for non-resident international buyers is how to use funds from their home country to purchase property in the U.S.
CNBC reported that Yuval Golan, CEO of the new company Waltz, which assists foreign buyers in purchasing U.S. real estate, stated that they provide a simpler remote buying experience for international investors, enabling them to acquire property within 30 days.
Their approach involves setting up a limited company in the home country of the international buyer, opening a bank account insured by the FDIC in the U.S., allowing buyers to transfer funds in seconds. As international buyers do not have credit history in the U.S., Waltz also acts as a mortgage lender for them, albeit at rates higher than the market average. The feasibility of this approach in China requires further understanding.