Foreign Buyers Recede from US Housing Market: Real Causes

Reason Behind the Downfall in US Housing Market

The acquisition of American residences by overseas purchasers has dwindled markedly over the past year, with experts pinpointing the underlying reasons. A recent investigation by the National Association of Realtors (NAR) reveals that international acquisitions of US residential properties have reached an unprecedented low since NAR commenced tracking these transactions in 2009. From April 2023 to March 2024, foreign homebuyers acquired 36% fewer homes compared to the previous 12 months, marking the steepest decline recorded to date.

The abrupt retreat, as elucidated by the NAR report, stems from a confluence of factors also affecting prospective domestic buyers, including elevated home prices and constrained inventory. Additionally, international investors are grappling with a robust US dollar, exacerbating their challenges.

The current strength of the US dollar is not encouraging for foreign buyers.

“The strong US dollar renders international travel more affordable for Americans but significantly inflates the cost of US homes for foreigners,” NAR Chief Economist Lawrence Yun articulated in the report. “Therefore, it’s unsurprising to witness a pullback in US home sales from foreign buyers.”

Yun further highlighted that the market’s current dynamics have historically precipitated similar downturns in buyer activity. “Persistently low housing inventory and surging prices remain pivotal factors in limiting home sales for both American and international buyers,” he noted.

Last year’s foreign residential real estate acquisitions reached their nadir since NAR’s records began. Among those who did secure a US residence, the average expenditure was a record-breaking $780,000 per property, with a median of $475,000. In comparison, the median price in 2023 was $396,400. The majority of these buyers originated from Canada, China, Mexico, and India, with a preference for properties in Florida, Texas, California, and Arizona. Chinese buyers, in particular, paid the highest average price of $1.3 million.

The report additionally observed that half of the foreign buyers paid in full with cash (as opposed to 28% of domestic existing home purchases), and 45% intend to use the properties as vacation homes, rental properties, or a combination of both.