Overseas buyers are now retreating from the US home market, thanks to slackening world economies, higher home prices, and a strong dollar.
This week the National Association of Realtors released its annual report on international buying. It found that together, resident and non-resident foreigners invested $102.6 billion in the US home market between April 2015 and March 2016, a drop of just 1% from the previous year.
But there was an exodus among non-resident buyers, whose purchases fell by 19% to $44 billion. And whereas foreign buyers were split about evenly between residents and non-residents in the previous findings, in the latest ones non-residents fell to 41%.
In March US home prices were 6% higher than a year ago. Meanwhile many foreign currencies have weakened against the US dollar. Those two factors made buying property in the US “a lot pricier,” said NAR’s chief economist Lawrence Yun in a press release.
For the second year in a row, Chinese buyers were the biggest spenders, both in terms of dollar volume and number of units purchased. They forked over $27.3 billion on US homes. That’s a slight decrease from a year ago, but still more than the next four countries combined.
But only 39% of Chinese buyers were non-residents, a drop from 47% in the previous period. That kind of drop was not seen among other groups. About 80% of Canadian and 61% of UK buyers were non-residents, by way of comparison.
A weaker yuan and “tighter regulation on individual capital outflows” in China may account for this, the report noted. Of course the outflows from China were still quite large: An estimated $735 billion of capital fled emerging-market economies last year, and China accounted for $676 billion of that.
In other findings, the median price of homes bought by foreigners was $277,000, higher than the overall median price of $223,000. And as for destinations, the most popular among foreign buyers were Florida, California, Texas, Arizona, and New York, accounting for over 50% of the purchases.