Why foreign buyers are pulling back from US housing market at record rate
Purchases fell by 21 percent between 2018 and 2017
Foreign home buyers are pulling back amid political uncertainty.
According to the National Association of Realtors‘ new survey cited by the Wall Street Journal, the number of purchases by international buyers fell by 21 percent between 2017 and 2018, amounting to a drop of $32 billion. It’s the largest decline on the books.
“The [discussion of a] trade war or just the rhetoric against foreigners may have dampened some of the enthusiasm to buy property in the U.S.,” NAR chief economist Lawrence Yun told the Journal. Higher home prices and a strong dollar are other key factors NAR economists pointed to as drivers behind the plummeting interest from overseas.
Though good news for Americans who’ve been eyeing properties particularly in more expensive enclaves, waning interest from abroad compounds the effects of a softening housing market–especially for luxury condo developers, who often target wealthy foreigners. Over the past six months, annual home sales have fallen in five months as mortgage rates and prices climb while inventory remains low.
The lion share of foreign home buyers–dominated by Chinese and Canadian nationals–are historically interested in homes at the higher end of the market purchasing homes with a median price of about $292,000. (For Chinese buyers, the median price is nearly $440,000.) Foreigners typically spend about $50,000 more than locals. [WSJ]