Why International Buyers Are Retreating From the U.S. Real Estate Market
Tray Bates
HOUSTON – (By Dale King, Realty News Report) – A stronger U.S. dollar can benefit American workers and the economy, but it has also cooled interest from international buyers in purchasing U.S. homes, according to the chairman of Texas Realtors, which represents 130,000 members.
“It was the total volume that dropped,” said Tray Bates of Texas Realtors. “As the dollar strengthens, it dissuades international buyers from purchasing in the U.S. They look for cheaper options.”
Bates noted the strong dollar is not the only factor influencing decisions, but it is a significant consideration for buyers overseas and in neighboring countries who search for bargains or the best return on their money.
His remarks followed the release of the Texas International Homebuyers Report by Texas Realtors, which found that buyers from outside the United States—particularly from Canada and Mexico—closed on $7.8 billion in Texas homes between April 2018 and March 2019.
That total is lower than the $10.89 billion in international purchases recorded in the previous year, covering April 2017 through March 2018.
Nationally, the U.S. experienced a 31% decline in the number of foreign buyer purchases compared with the prior reporting period.
Florida remains the top destination for foreign buyers across the country, accounting for about one in three international purchases (31%). California ranks second at 12%.
Texas is third nationwide, with 10% of homes sold to international buyers—18,310 residential sales out of 183,100 across the country.
Within Texas, Houston leads the list of metropolitan areas that attract international newcomers. The Bayou City welcomed 38,686 international arrivals, ranking fifth in the nation; many settled in Houston, The Woodlands and Sugar Land.
Other Texas metros in the national rankings included Dallas/Fort Worth/Arlington at eighth with 34,620 immigrants; Austin/Round Rock/San Marcos at 25th with 7,908; San Antonio/Bexar County area at 29th with 6,274; and El Paso at 36th with 4,397 newcomers.
“Houston has one of the most—if not the most—diverse populations,” Bates said. “If you are an online buyer, review the top metros and ask yourself, ‘Is there a community here for me? Can I make a mark here?’”
“The strong economy is one of many compelling reasons to consider Houston,” he added.
Texas is particularly popular with buyers from Mexico and India. Among Mexican buyers, 28% purchased a home in Texas; the next closest state for Mexican buyers was California at 10%. For buyers from India, 13% chose Texas, just behind Florida at 14%.
On the commercial side, Texas ranks third among states for commercial real estate purchases handled by members of the statewide Realtor association, according to the National Association of Realtors’ 2019 Commercial Real Estate International Business Trends report. Dallas was the fifth-most popular U.S. market for international commercial real estate investment, with $2.9 billion in foreign-purchased commercial property, while Houston ranked ninth with $2.2 billion.
Despite this year’s decline in overseas residential sales, Bates emphasized that Texas remains an attractive destination for international investment because of its robust economy, favorable business climate and large metropolitan markets. “Investors are interested in residential and commercial real estate in Texas where they can deploy resources for attractive returns. We’re seeing international investors pursue large-scale developments such as subdivisions and master-planned communities,” he said.
Earlier in 2019, Texas Realtors delegates attended MIPIM (Le marché international des professionnels de l’immobilier) in Cannes, France, to meet international real estate investors and highlight Texas’ investment opportunities.
“One of the key takeaways from MIPIM was the increasingly diversified interest in both residential and commercial real estate in Texas,” said Hanne Sagalowsky, a Dallas Realtor and National Association of Realtors Coordinator for Western Europe, Israel and Turkey.
She added that with growing foreign interest, Realtors can assist international buyers in navigating common hurdles such as tax issues and currency conversion to complete transactions successfully.
In conclusion, Bates noted, “The world continues to view Texas as a strong environment for international real estate investment opportunities.”
To view the full Texas International Homebuyers Report, visit texasrealestate.com.
