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Foreign home buyers have played a prominent role in certain U.S. housing markets, buying up properties and leaving competing buyers empty-handed. But it appears that even foreign buyers have grown weary of high prices and rising mortgage rates, according to a new report from the National Association of Realtors (NAR).
Foreign buyers purchased $53.3 billion worth of U.S. existing homes from April 2022 through March 2023, according to the NAR — a decline of 9.6% from the prior year. A total of 84,600 properties were bought by international buyers during the period, which was down 14.2% from a year earlier and marked the fewest number of homes bought since 2009, when NAR began tracking the data.
International house hunters seem to be deterred by the same housing trends that have kept many U.S. buyers on the sidelines — at least for now.
“Sharply lower housing inventory in the U.S. and higher borrowing costs across the world have dented international buyers for two straight years,” NAR Chief Economist Lawrence Yun said in a press release. “However, recovering international travel following the end of the pandemic will bring more foreign transactions in coming months and years.”
On a positive note, foreign buyers are willing to dish out more money for their homes these days — mainly because they have little choice. The average existing-home price paid by international buyers was $639,900 during the period, while the median price was $396,400. Both were the highest ever recorded by the NAR, rising 7% and 8.3%, respectively, from the previous year.
Chinese buyers paid the highest average purchase price among international buyers, at $1.23 million. One-third of Chinese buyers purchased property in California. The number of 2023 Chinese home purchases is the highest since 2018, CNBC reported, though their reasons for buying have shifted.
“Only about one in every 10 Chinese buyers is purchasing purely as an investment, which is a big change from the mid-2010s, when wealthy Chinese consumers looked to diversify their wealth out of China,” Kashif Ansari, Juwai IQI co-founder and group CEO, told CNBC. “In 2023, the typical Chinese buyer is no longer an offshore investor but is on their way towards becoming an American resident and citizen.”
After China, the four countries with the most U.S. existing-home buyers were Mexico, Canada, India and Colombia. The top U.S. destinations for foreign buyers were Florida (23%); California and Texas (12% each); and North Carolina, Arizona and Illinois (4% each).
All-cash sales accounted for 42% of international buyer transactions vs. 26% of all existing-home buyers, according to NAR. Non-resident foreign buyers (52%) were more likely to make an all-cash purchase than resident foreign buyers (32%). Two-thirds of Colombian buyers (67%) made all-cash purchases — the highest share among the top five foreign buyer nations.
Theoretically, fewer foreign buyers should open up more housing inventory to U.S. buyers. When that happens, home prices tend to go down. But don’t expect lower interest from foreign buyers to have much impact on the market as a whole.
As CNBC noted, international buyers only account for a little more than 2% of all buyers, so they don’t play a major role in the broader U.S. market. However, there could be “help on the margins” in certain cities with a lot of foreign buyers.
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