International Investors on the Residential Real Estate Market in the USA: Who they are and where they invest
The United States of America has been an attractive destination for international investors for many reasons. Among many types of investment possibilities, foreign investment in US residential real estate is still a strong segment on the US real estate market.
The NAR – the National Association of Realtors in the United Stated of America – is publishing an annual report every summer on the Profile of International Transactions in U.S. Residential Real Estate. The survey is reporting about the real estate sales for foreigners in the U.S., where they come from, which are the most attractive destinations and buying preferences of the investors. The latest report provides information about the time period between April 2017 and March 2018.
International or foreign clients can be divided in two groups of home buyers: the non-U.S. citizens with permanent residences outside the United States, and non-U.S. citizens who are recent immigrants or non-immigrant visa holders.
The survey shows that international homebuyers invested $121 billion in residential property in the above mentioned time period. This means that they bought 266,800 residential properties with an average price of $454,400, which is still higher than the average price of all homebuyers in the US. $67.9 of the $121 billion has been invested by resident foreign buyers, while $53 billion by non-resident foreign investors. The transactions to foreign buyers accounted for eight percent of all home sales in the US in the examined time period.
The countries that are still on top of the international investors list are China, Canada and the United Kingdom, who confirmed their positions of last year. They are followed by India and Mexico with an increase of the share of the investment volume arriving from India. The country that invested the most in residential property is China with $30.4 billion, followed by Canada with $10.5 billion and UK buyers with $7.3. The dollar volume of the invested amount coming from India increased to $7.2 billion and declined coming from Mexico to $4.2 billion. Canadian, Mexican and UK investors typically purchase properties in a lower price range, while Chinese and Indian buyers purchase more expensive properties.
Foreigners purchase properties nationwide, however, the top destinations are the states of Florida, California, Texas, New York and Arizona. Florida alone accounts for about 20% of all international purchases being the preferred destination of Latin-American, Canadian and UK buyers. California accounts for about 14% of foreign purchases, followed by Texas with 9%. The main factors when choosing a destination for a foreign buyer are job opportunities and education, presence of family and friends, culture and geographical proximity, as about half of the investors purchase the properties as a primary residence. However, in many cases, the purpose of buying a property is an investment or using it as a vacation home.
Not all international buyers completed the purchase though. About 20% of potential buyers decided not to invest at the end, simply because they did not find the right property. Now this is an important reason, why the figure of the right broker or intermediary is so important: not only foreign, but also domestic buyers need the support of an experienced partner, who knows the local market and is able to find the best investment solutions for every type of investor.
Source: Profile of International Transactions in U.S. Residential Real Estate 2018, by the National Association of Realtors@