Foreign investment in residential real estate in the U.S. has taken a tumble.
Foreign buyers purchased $77.9 billion worth of existing U.S. homes between April 2018 and March 2019, a 36 percent decline compared to the $121 billion recorded the previous year, according to a report from the National Association of Realtors released Wednesday.
Buyers from China topped the list, outspending those from other countries for the seventh consecutive year with about $13.4 billion worth of home purchases. That still represented a sharp decline — 56 percent — from the prior year.
Canadians ranked second, spending $8 billion on residential properties last year. About 75 percent of them were the most likely to pay all cash while half of Chinese buyers paid all cash. Buyers from India spent the third most, $6.9 billion. The United Kingdom ranked fourth at $3.8 billion and Mexico was fifth at $2.3 billion.
Within the U.S., 20 percent of foreign investment was spent in Florida, which comes out to about $15.6 billion between the spring of 2018 and 2019. California attracted 12 percent of the nearly $80 billion international buyers spent, or about $9.35 billion. Texas was the third most popular state for foreigners, accounting for 10 percent of such purchases.
While Florida has been known to attract foreign and out-of-state investment due to its favorable tax laws, California is not so friendly. It has the highest state income tax in the country.
Slower economic growth worldwide and a strong dollar have contributed to the pullback, said Lawrence Yun, chief economist at NAR.
“The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S,” he said in a statement accompanying the report.
The top five countries reported an annual drop in total sales volume. Chinese investment, especially, could continue to drop. The Chinese government recently cautioned students considering studying in the U.S. — who historically spend billions on homes near their schools — from studying in America. The continuing trade war between the Trump administration and China could also be a contributing factor, experts said.