The number of foreign buyers continued to fall last year despite an easing of pandemic restrictions—though price appreciation of homes in domestic markets actually caused the overall dollar amount of these transactions to jump by 8.5%, setting a new record average price, according to the latest report from the National Association of REALTORS® (NAR).
The annual Profile of International Transactions in U.S. Residential Real Estate found the median home sale price to a foreign buyer hit $366,100, with the average jumping to $598,200 as international buyers spent $59 billion on domestic residential real estate, even as their overall numbers remained lower.
“For the second year in a row, restrictions and general caution tied to international travel during the pandemic slowed home buying by wealthier foreign buyers,” said NAR Chief Economist Lawrence Yun in a statement. “Even so, domestic home-buying demand was exceptional and, therefore, boosted home sales nationally.”
Brokers and agents have qualitatively started seeing an uptick in foreign real estate investment, even if that market segment is down from recent highs. At the same time, Yun warned that other macro factors could continue to dampen demand from international buyers who otherwise would love to own a home in the United States.
“Affordability challenges along with the inability to find the right property were the top reasons given for prospective international buyers who showed interest but ultimately did not purchase a home in the United States,” Yun said.
At the same time, some foreign buyers will not be affected by rising mortgage rates as many are more likely to make all-cash offers, Yun noted, adding that international flights have increased in recent months as well.
Who, where and why
The top countries where foreign buyers came from have remained mostly the same, with China and Canada topping the list again (with $6.1 and $5.6 billion spent, respectively). India ($3.6 billion), Mexico ($2.9 billion) and Brazil ($1.6 billion) rounded out the top five.
Top destinations for international buyers in the United States also remained mostly unchanged from previous years, with Florida still on top, claiming 24% of all foreign home investment. California came in at a distant second (11%), followed by Texas (8%), Arizona (7%), and New York and North Carolina, tied at 4%.
Country of origin continued to dictate where foreign nationals were looking to buy a home, with California still the top destination for Chinese buyers, with 31% choosing the Golden State. Chinese buyers also spent the most on average, at just about $1 million.
A majority of the top-dollar amount spent by international buyers (58%) was by people already living in the country—recent immigrants or those with visas. That number was up 5.2% from last year.
A plurality of investors planned to use their new properties as vacation homes, rentals or both. Canadians were most likely to purchase a property as purely a vacation home, while Colombian buyers were most likely to say their property was purely meant as a rental. Almost three in four (74%) Indian buyers were purchasing a home as their primary residence.
