‘The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S. …’
(Joshua Paladino, Liberty Headlines) Foreign investment in U.S. real estate in the past 12 months has dropped compared to the same 12-month period last year, with Chinese investors significantly slowing property purchases.
The National Association of Realtors conducted a survey of international residential buyers and found that purchases declined 36 percent year over year, from $121 billion in 2017-2018 to $77.9 billion in 2018-2019.
Residential purchases declined for both non-resident foreign buyers, by 37 percent from $53 billion to $33.2 billion, and resident foreign buyers, by 34 percent from $67.9 billion to $44.7 billion.
The decrease in foreign investment in U.S. real estate has multiple potential causes, according to the National Association of Realtors.
“A confluence of many factors—slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar and a low inventory of homes for sale—contributed to the pullback of foreign buyers,” said Lawrence Yun, NAR chief economist.
“However, the magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.,” he said.
Global growth slowed from 3.6 percent in 2018 to an estimated 3.3 percent in 2019.
The number of residential properties purchased by foreign buyers dropped from 266,800 to 183,100.
China remained the largest single purchaser of U.S. properties in dollar amount, NAR reported.
Canadian and Chinese investors bought about the same number of properties, though Chinese investors bought more expensive properties.
Chinese investors spent $13.4 billion in residential property from April 2018 to March 2019. That’s a 56 percent decline from the same period in 2017-2018.
China’s economic growth has slowed from 6.9 percent to 6.3 percent year over year, in part due to the shifting trade relationship between the United States and China.
Canada, India, the United Kingdom and Mexico spent the second through fifth most on U.S. residential properties, but they all decreased their purchases during the past year.
Canada spent $8 billion, India $6.9 billion, the UK spent $3.8 billion, and Mexic0 spent $2.3 billion.
The majority of international purchases were in Florida (20 percent), California (12 percent), Texas (10 percent), Arizona (5 percent), and New Jersey (4 percent).