Foreign purchases of U.S. residential real estate recently rose to a record level in terms of dollar volume and number of homes sold.
According to the National Association of Realtors, between April 2016 and March 2017, foreign purchasers closed on $153 billion worth of U.S. residential properties. That number was up 49 percent from the same period in 2016, surpassing the previous high in 2015.
CNBC reported that “[f]oreign sales accounted for 10 percent of all existing home sales by dollar volume and 5 percent by number of properties. In total, foreign buyers purchased 284,455 homes, up 32 percent from the previous year.”
Sales in the states of Florida, California, and Texas accounted for half of all foreign purchases.
Chinese buyers ranked first in the number of purchases, followed by those from Canada, the United Kingdom, Mexico, and India. Approximately 1 percent of purchases were made by Russian buyers.
Canadian buyers were responsible for the biggest overall surge in sales in the last year. Those from across the United States’ northern border purchased $19 billion worth of properties, mostly in Florida. Canadians also paid more for their real estate, with the average price of a home bought by a Canadian nearly doubling to $561,000.
Elli Davis, a real estate agent in Toronto, said that older buyers are downsizing from their primary residences and buying a second or third home in Florida.
“There are more [baby] boomers now than ever before. It’s the demographic,” Davis said. “The real estate here is worth so much more money. They all have more money. They’re selling the big city houses that are now $2 million-plus, where they went up so much in the last 10 to 15 years, so they’re cashing in.”
Despite the strength of international interest in real estate during the second half of 2016, it could be waning due to tighter regulations in China and weakening currencies in some international markets.
“Stricter foreign government regulations and the current uncertainty on policy surrounding U.S. immigration and international trade policy could very well lead to a slowdown in foreign investment,” said Lawrence Yun, chief economist for the NAR.
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