The gates are opening, and residential agents in major U.S. markets such as New York and Miami are preparing for a resurgence of foreign buyers.
Prospective buyers who have been sitting on the sidelines since the pandemic began last year are setting up appointments with their agents in the U.S. now that the travel ban has been lifted on Monday for 33 countries, including some in the European Union, the United Kingdom, China, Canada, Mexico, Brazil and India.
Foreign purchases of U.S. homes plummeted from April 2020 to March 2021, according to the National Association of Realtors, down 27 percent to $54.4 billion, compared to the previous year.
While those buyers were absent, housing prices skyrocketed and inventory fell to record lows in some cities.
Enzo Rosani, Barnes International
Broker Enzo Rosani, a partner with Barnes International in Miami who works primarily with European clients, said his buyers are coming to South Florida “all at once” now that the ban has lifted. He’s been preparing for them by finding them short-term rentals and setting up showings and appointments at sales centers. His clients are looking at condos priced from about $700,000 to $2 million and up.
Supply is a problem, especially as Miami enters its high season. In South Florida, single-family home sales have soared over the past year and a half, with many locals now priced out of the market and opting for condos.
“The market is super intense and inventory is low,” Rosani said, citing a heightening of bidding wars. He’s been setting up as many showings as possible to give his clients options. “Europeans hate [bidding wars]. As soon as they feel rushed, it’s a turnoff.”
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Craig Studnicky, broker and CEO of International Sales Group in South Florida, said “every single Realtor” in the region has been hearing from their international clients, particularly from Canada, Colombia and Peru.
“I think they’re going to be mostly disappointed with the lack of supply of houses,” Studnicky said. “There’s just not that much to buy, so they’re going to be highly frustrated with that reality. But there are condos to buy.”
Brokers have also been traveling outside the U.S. to showcase new condo developments.
Edgardo Defortuna, Fortune International Group
Edgardo Defortuna, president and CEO of the Miami-based brokerage and development firm Fortune International Group, said his agents have been traveling to promote preconstruction projects in Mexico, Chile, Argentina and Peru.
Foreigners immediately began booking their flights to major U.S. cities when the White House announced the Covid-19 border restrictions for fully vaccinated international visitors would be lifted Nov. 8.
Brown Harris Stevens broker Martha Kramer noticed her phone buzzing with notifications, her clients abroad telling her they were eager to set up appointments to view New York City listings in person.
“These are people who are used to traveling, who are not used to being told you cannot travel to XYZ,” Kramer said. She likened the last year and a half, for them, to being in a prison.
While some travel exemptions allowed visitors to the U.S., many clients like hers had gone nearly two years without physically touring listings, opting instead to make deals virtually, sight unseen.
That was especially the case for those looking to lock down purchases of primary residences, some brokers said. Yet, when it came to investment properties and pieds-à-terre, buyers preferred to wait. With border restrictions now lifted, it’s expected that those buyers will be making major money moves.
Charlie Attias, Compass
Charlie Attias, a top broker at Compass in New York City, started prepping months ago for the wave of buyers he’s expecting. The appointments he has lined up are unheard of at this time of year, when the sales market in the city usually slows amid the holiday season. Several of his clients are coming to view listings between Christmas and New Year’s.
The arrival of international buyers comes as the Manhattan residential sales market is on fire, with the third quarter the busiest in decades. Though activity accelerated, supply remained higher than usual, so prices held steady.
Stan Ponte, Sotheby’s International Realty’s senior global real estate advisor in New York, called the return of foreign buyers the “perfect puzzle piece” that could change that. They could soak up inventory and put pressure on prices to drive them upward.
While he doesn’t have dozens of appointments scheduled in the next few weeks, the number (which he declined to specify) is enough for him to say that the influx is only beginning.
“We know it’s happening, and we’re ahead of it,” Ponte said. “Every article is talking about the overall economic impact of foreign travel. When those things are happening, real estate happens.”
Status quo
Some brokers, on the other hand, suggested that the lift in travel restrictions wouldn’t change the fact that many serious buyers were already OK with purchasing homes virtually, said Hala Adra, a broker in one of Compass’ D.C. offices. Ongoing visa backlogs are also an issue of concern, Hala said, adding that some clients had visa appointments delayed until 2022.
Hala Adra, Compass
“For me, Nov. 8 is [just] a date,” Adra said. “We’re still going to see a delay of international people coming physically here, unless they’re here on a student visa, or it’s facilitated by the international organization they work for here. If they’re coming on their own, the schedule for the appointment at their local embassy is delayed.”
In Los Angeles, brokers aren’t expecting a massive wave of international buyers, but are expecting activity to pick up — especially in the ultra-luxury market.
Unlike New York and Miami, the L.A. market hasn’t been affected by a major loss of international buyers over the last few years, given that most real estate is snapped up by domestic clients, said Compass broker Ari Afshar.
Ari Afshar, Compass
Afshar said he’s been talking with international brokerages, but has had “mixed signals” in expected U.S. buying activity.
“I think it’ll be a wait and see,” he said.
Stephen Shapiro, who leads L.A. luxury brokerage Westside Estates Agency, said he’s not expecting a massive influx of buyers, as his clients have always mostly been from the U.S.
“We focus on local buyers,” he said. “When an international buyer does come in, we’re prepared to service them.”
Los Angeles has never experienced the same share of international buyers as New York or Miami, brokers agreed. Eastern time is generally preferable for both Asian and European buyers, and South American investors have tended to gravitate toward Miami.
Still, ultra high-net-worth buyers from abroad have historically flocked to L.A. neighborhoods like Beverly Hills, Holmby Hills and Brentwood, and international buyers could return to that high-end housing market.
Some brokers have already seen an increase in activity. Douglas Elliman has had high-net-worth buyers from Russia and Japan express interest in high-end properties in these neighborhoods, according to Stephen Kotler, who leads the brokerage’s West Coast operations.
Carl Gambino, Compass
Compass broker Carl Gambino, who also operates in New York and Miami, agreed. He expects international buyers will start to swarm L.A.’s ultra-luxury market this month.
While many foreign buyers weren’t able to travel to the U.S. since last March, domestic buyers took over, especially in states that include Florida and Texas. That could now change.
“We have had essentially an American market for the past five, six years. It has been red, white and blue all the way,” said Dora Puig, a top luxury broker in Miami Beach. “I just think we’re going to get a tsunami of foreigners coming to the market. I told my team, ‘brace yourselves.’”