Foreign buyers are inching away from residential property in the U.S., causing purchases to drop by $10 billion this year.
Non-U.S. residents only bought $44 billion worth of residential real estate during the fiscal year that ended in March, the Wall Street Journal reported. The $10 billion drop represented the lowest level of foreign investment in residential real estate since 2013, according to a survey by the National Association of Realtors released on Wednesday. The average price of the homes purchased by these buyers also fell in 2015 to $480,000 from $500,000.
Though purchases by immigrants increased, the share of non-resident foreign buyers plunged to 41 percent from 50 percent.
This is potentially bad news for Manhattan developers who — facing a softening luxury market — largely depend on foreign buyers to scoop up their new high-priced condo units that will soon come online. The weakening economies in China, Europe and South America and the strength of the U.S. dollar may have played a part in decrease, the newspaper reported.
Chinese buyers purchased $27 billion worth of residential real estate in 2015, the largest of any group but a drop from the previous year’s $28.6 billion. At a panel held by TRD in May, experts said buyers in India may emerge as strong investors in the city.
And in the wake of Britain’s break from the European Union, New York City may see a spike in international interest. The Real Deal reported earlier this month that investors may shy away from London’s uncertain market and decide to instead park their cash in New York. [WSJ] — Kathryn Brenzel