U.S. homebuyers haven’t been overly enthusiastic about jumping into the housing market – despite a strong U.S. economy – but some foreign investors are still zeroing in on opportunities in certain states.
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Overall foreign investment in U.S. residential real estate declined between April 2018 and March 2019, but China and Canada topped the list of non-domestic buyers, according to a new survey from the National Association of Realtors (NAR).
For the seventh consecutive year, Chinese buyers showed the highest engagement – accounting for about $13.4 billion worth of residential property purchased. That, however, is a 56 percent decline compared to the 12 months prior.
Canada trailed China with $8 billion worth of purchases. Thought Canadians purchased about the same number of properties as buyers from China, they tended to purchase less expensive properties.
India, the U.K and Mexico rounded out to the top five countries for international buyers. The dollar volume of purchases declined among every one of the top five.
In line with domestic trends, Florida received the highest amount of foreign investment – attracting one-fifth of foreign buyers, especially those from Canada.
California was the second biggest hotspot for out-of-country purchasers, accounting for 12 percent of international purchases. The third was Texas, followed by Arizona.
Florida and Texas are two popular locations for domestic movers, as well, since both states charge no state income taxes.
Over the 12 months ending in March, foreign buyers purchased $77.9 billion worth of existing homes in the U.S. – a 36 percent decline from the year prior. NAR attributed this decline to slowing global growth, tighter capital controls in China, a stronger U.S. dollar and a more limited inventory of homes for sale.
“The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.,” Lawrence Yun, NAR chief economist, said in a statement.
Meanwhile, total mortgage applications in the U.S. dropped more than 1 percent last week, as interest rates rose to their highest level in a month.
Sales of single-family homes fell 7.8 percent – unexpectedly – in May, for the second consecutive month.