Foreign Investment in Homes Falls to Lowest Level in a Decade

From April 2020 to March 2021, international buyers purchased 107,000 US residential properties totaling $54.4 billion, according to the National Association of Realtors. Those dollar and sales figures were down 31% and 27%, respectively, from the previous year.

In addition, the international purchases of US homes from April 2020 to March 2021 hit the lowest volumes since 2011. International buyers accounted for 2.8% of the $5.8 trillion in existing-home sales during this period.

“The big decline in foreign purchases of homes in the US in the past year is no surprise, given the pandemic-induced lockdowns and international travel restrictions,” said NAR Chief Economist Lawrence Yun in a prepared statement.

Not all foreign buyers are the same. Those who resided in the US as recent immigrants or who were holding visas that allowed them to live in the US purchased $32.4 billion worth of homes, a 21% decrease from the prior year. That represented 60% of the dollar volume of purchases. Those foreign buyers who lived abroad purchased $22 billion worth of existing homes, down 33% from the 12 months prior. They comprised 40% of the dollar volume.

The leaders, by dollar volume, for US homes were China and Canada at $4.5 billion and $4.2 billion, respectively. Coming in next were India ($3.1 billion), Mexico ($2.9 billion) and the United Kingdom ($2.7 billion). Investment from the United Kingdom increased from $1.4 billion to $2.7 billion year over year, which pulled it into the top five replacing Colombia as the fifth largest country of origin by dollar volume of foreign buyers.

The other countries in the top five saw dollar volume decrease. It dropped by at least 50% for foreign buyers from China ($4.5 billion from $11.5 billion), Canada ($4.2 billion from $9.5 billion) and Mexico ($2.9 billion from $5.8 billion).

Florida, which accounted for 21% of all international purchases, was the top destination for the 13th straight year. It was followed by California (16%), Texas (9%), Arizona (5%), New Jersey (4%) and New York (4%).

Thirty-nine percent of international sales were all-cash transactions, with a higher percentage among non-resident compared to resident foreign buyers at 61% and 24%, respectively. Most foreign investors, 65%, purchased detached single-family homes and townhouses. Forty-three percent of foreign buyers purchased the property for primary residence use and 65%.

Foreign investors didn’t just back away from homes during the pandemic. Cross-border investment in US commercial real estate also fell, but now it is on the selective rise.

 “We did see a slowdown [of international investment] during the pandemic,” Riaz Cassum, executive managing director and global head of international capital at JLL Capital Markets, told GlobeSt.com. “A lot of it was related to travel restrictions and difficulty in terms of being able to look at real estate, meeting with operating partners, et cetera.”