WASHINGTON – Foreign investment in U.S. residential real estate rose sharply over the past year, with activity concentrated in a few key states. According to the National Association of Realtors’ report, international buyers and recent immigrants purchased $153 billion in U.S. residential property between April 2016 and March 2017 — a 49 percent increase from the prior year.
The NAR’s 2017 Profile of International Activity in U.S. Residential Real Estate found that much of this buying was focused in Florida, California and Texas. These three states remained the top destinations for foreign purchasers, accounting for 22 percent, 12 percent and 12 percent of foreign transactions respectively.
In total, foreign buyers purchased 284,455 U.S. properties during the survey period. Chinese buyers led all countries by dollar volume, spending $31.7 billion — up from $27.3 billion the previous year and surpassing the 2015 total of $28.6 billion. China also topped the list for units purchased for the third straight year, with 40,572 homes acquired, up from 29,195 in 2016.
Other leading source countries by sales dollar volume included Canada ($19.0 billion), the United Kingdom ($9.5 billion), Mexico ($9.3 billion) and India ($7.8 billion). Each of these markets showed growth compared with the prior year.
While China remained the largest source of dollar-volume purchases for the fourth consecutive year, Canada accounted for a particularly notable increase. Canadian purchases surged to $19.0 billion after falling to $8.9 billion in 2016 (and $11.2 billion in 2015), setting a new high for Canadian buyer activity in the survey.
“Political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of U.S. property over the past year,” said Lawrence Yun, NAR chief economist. He noted that despite a stronger U.S. dollar and steady U.S. home-price growth making purchases costlier in many areas, buyers from abroad increasingly viewed the United States as a safe and attractive place to live, work and invest.
Yun attributed part of the Canadian surge to relative affordability: although U.S. markets have seen significant price growth, some Canadian cities experienced even faster appreciation, particularly Vancouver and Toronto. This made U.S. properties comparatively more affordable for many Canadian buyers.
“Inventory shortages continue to drive up U.S. home values, but prices in five countries, including Canada, experienced even quicker appreciation,” Yun said. “Some of the acceleration in foreign purchases over the past year appears to result from a combination of more affordable options in the U.S. and foreign buyers acting now to avoid the risk of further currency depreciation that would make U.S. properties costlier in the future.”
On average, foreign buyers paid $302,290 per property, a 9.0 percent increase from the median sales price reported in 2016 ($277,380). This average was notably higher than the median price for all existing homes sold in the same period ($235,792). About 10 percent of foreign purchases exceeded $1 million, and 44 percent of foreign transactions were completed with all-cash offers.