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Foreign Investment in U.S. Residential Real Estate Plummets
August 2, 2021

Foreign Investment in U.S. Residential Real Estate Plummets

by The CE Shop Team

Foreign Buyers Spent $54.4 Billion on Existing Homes During 12-Month Period

Foreign investment in U.S. residential real estate decreased sharply during the COVID-19 pandemic, according to new research from the National Association of REALTORS®.

Foreign buyers spent $54.4 billion on existing homes in the United States from April 2020 through March 2021, says NAR’s annual Profile of International Transactions in U.S. Residential Real Estate, which was released in July. That’s a 27% decrease from the previous 12-month period and the fourth time in a row that foreign investment in U.S. residential real estate has dropped.

Foreign buyers purchased 107,000 residential properties, a 31% decrease from the previous year. Both the dollar and sales volumes hit record lows, dipping below the previous lowest figures recorded in 2011, NAR says.

"The big decline in foreign purchases of homes in the U.S. in the past year is no surprise, given the pandemic-induced lockdowns and international travel restrictions," said NAR Chief Economist Lawrence Yun. "Yet, even with the absence of foreign buyers, the U.S. housing market strengthened solidly."

Decline in Foreign Investment Offset by Domestic Sales

Despite the decrease in home purchases by foreign buyers, the U.S. housing market was booming for most of 2020.

“In the U.S., the adverse impact of COVID-19 on the housing market was brief, lasting only in the second quarter of 2020,” the report says. Existing homes sales dipped in May but had fully recovered by July, leading us into the incredibly competitive, low-inventory market that we’ve seen for the past year, with demand for homes far exceeding new listings.

In February, the average home received four offers, up from two-to-three offers a year earlier, NAR reported. The median property sold in 20 days, a record low since the housing market’s recovery in 2012. The market was so hot that many real estate agents had to learn how to manage their clients’ expectations about the buying and selling process.

“The decline in our international business was offset completely by the unprecedented demand, domestically, that we saw,” said Brent Leathwood, a Broker in Sarasota, Florida, in an interview with The Wall Street Journal.

COVID-19 restrictions likely affected international buyers’ ability to purchase residential real estate in the U.S.

“A lot of people have been wanting to buy but haven’t been able to come here and shop,” Enzo Ricciardelli, a Broker in Los Angeles, California, told WSJ.

Tourist arrivals to the U.S. dropped from 5.8 million a month before the pandemic to 250,000 in April 2020, NAR’s report says. Tourism has started to recover, evidenced by the 1.4 million arrivals in April 2021. That could signal the return of foreign buyers to residential real estate, but if they do return, they’ll be forced to contend with the ultra-competitive market in the U.S.

"As travel restrictions loosen and foreign students return to U.S. colleges in the upcoming year, there is likely to be some growth in foreign buying of U.S. real estate," said Yun, the NAR economist. "High home prices and the ongoing lack of inventory could, however, pose a challenge for buyers."

A Profile of Foreign Homebuyers

In its annual report, NAR’s definition of an international or foreign client included both “non-resident foreigners” and “resident foreigners.” The second category, which accounted for 58% of foreign buyers, is made up of recent immigrants and people holding visas that allow them to live in the country.

Foreign buyers remained incredibly interested in Florida, which has been the top destination for 13 straight years, NAR says. 

The states with the greatest share of international buyers are: 

  • Florida: 21% 
  • California: 16%
  • Texas: 9%
  • Arizona: 5% 
  • New York: 4%
  • New Jersey: 4%

And the buyers are from:

  • Canada: 8% of foreign buyers, spent $4.2 billion
  • Mexico: 7% of foreign buyers, spent $2.9 billion
  • China: 6% of foreign buyers, spent $4.5 billion
  • India: 4% of foreign buyers, spent $3.1 billion
  • United Kingdom: 4% of foreign buyers, spent $2.3 billion

Notably, China, which had been the top country of origin of foreign buyers since 2015, fell to third place, the report says. While China fell to third place by the number of homes purchased, it remained the largest foreign buyer in terms of dollar volume.

In general, foreign buyers spent slightly more on homes than their American counterparts, the report says. The median foreign buyer purchase price — $351,800 — was higher than the median for all U.S. existing homes sold, which was $305,500.

“The price difference reflects the choice of location and type of properties purchased by foreign buyers,” the report says. 9% of foreign buyers purchased properties worth more than $1 million, compared to about 6% among all existing-homebuyers.


A few more facts about international buyers:

  • 39% paid all-cash, compared to 19% among all existing-homebuyers
  • 42% purchased a property for use as a vacation home, rental, or both
  • 65% purchased a detached single-family home or townhome

Although the $54.4 billion that international buyers spent on U.S. residential real estate sounds like a lot of money, it was only 2.8% of the total $1.96 trillion spent on existing homes from April 2020 through March 2021, NAR says.

Similarly, the 107,000 homes purchased by foreign clients accounted for approximately 2% of the 5.79 million existing homes sold in the U.S. during that period.

Foreign buyers living in the U.S. spent $32.4 billion, a 21% decrease from the prior year and making up 60% of total purchases by international clients. Foreign buyers who lived abroad spent $22 billion, down 33% and making up for 40% of the dollar volume.

While this niche market represents a relatively small segment of the overall U.S. housing market, its influence can’t be ignored, especially in high-end markets or sunny vacation spots.

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