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U.S. home sales to foreign buyers fell to their lowest level in more than a decade in the 12 months to the end of March. Foreigners face the same hurdles in the property market as Americans, but their interest is also dampened by a strong dollar.
The National Association of Realtors (NAR) said in its latest report this weekend that Chinese, Canadian and other foreign buyers purchased 54,300 second-hand homes in the United States from April 2023 to the end of March this year. Compared with the previous 12 months, this means a 36% drop and is also the lowest number since relevant data began to be recorded in 2009.
The total value of homes sold during the monitoring period reached $42 billion (€38.57 billion). This is 21.2% less than in the 12 months to the end of March 2023.
“Foreign buyers face the same complexities in the property market as domestic buyers – lack of supply or higher mortgage rates.” said Lawrence Yun, NAR’s chief economist. “In addition, however, many foreign stakeholders are deterred by the strength of the U.S. dollar,” He added.
The U.S. housing market has been declining since 2022
The U.S. housing market has been on a downward spiral since mortgage rates began to rise sharply after the coronavirus pandemic ended in 2022. Sales of existing homes fell to a nearly 30-year low last year after the most popular home loan rate rose to 7.79%. That was the highest level of 30-year mortgage rates in 23 years.
However, even after the downward adjustment, they mostly remain at around 7%, which limits the purchasing power of the relevant parties. In addition, although the situation has improved slightly in recent months, the number of houses for sale has remained close to historical lows for a long time. Therefore, housing prices continue to remain high.
For foreigners, these factors also include the strength of the US dollar. “On one hand, a strong dollar makes it cheaper for Americans to travel abroad, but on the other hand, it makes U.S. real estate more expensive for foreign buyers.” Yun said. “It’s not surprising that the number of foreigners buying homes in the U.S. is declining,” He added.
To a large extent, Chinese people are involved in home purchases
Foreign buyers recorded a decline in purchases of existing homes in the U.S. during the 12-month period from April 2016 to March 2017. Foreigners purchased 284,500 homes in the U.S., with the Chinese accounting for a large portion of those purchases, according to NAR.
Canadians accounted for 13% of all homes sold in the U.S. in the 12 months to the end of March, followed by Mexicans and Chinese. Canadians accounted for 13% of all homes sold in the U.S., while Chinese and Mexicans accounted for 11%.
Among the US states, Florida is the most attractive to foreigners. There, 20% of all homes purchased by foreign buyers in the US were sold. Texas (13%), California (11%) and Arizona followed closely behind, with about 5% of homes sold in the US to foreigners. Following Arizona were Georgia, New Jersey, New York and North Carolina, with 4%.
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