A sluggish U.S. housing market and tighter currency controls by the Chinese government caused the dollar volume of homes purchased by foreign buyers from April 2018 to March 2019 to drop 36%, according to a report by CNBC.
The information, released by the National Association of Realtors (NAR), added that the decline was due to a drop in the volume and average price of purchases. Foreigners bought 183,000 properties valued at $77.9 billion, which is down from 266,800 properties valued at $121 billion in the prior year.
According to CNBC, foreigners paid an average price of $286,600 for properties, and while higher than the median for all existing homebuyers ($259,600), it is down from the average of $290,400 the previous year.
“A confluence of many factors—slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar and a low inventory of homes for sale—contributed to the pullback of foreign buyers,” said Lawrence Yun, NAR’s Chief Economist. “However, the magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.”
The Chinese were the leading buyers for the seventh-consecutive year, buying an estimated $13.4 billion in residential property, which is a 56% decline from the previous year. The recent political climate may also be causing the Chinese to pullback on U.S. real estate, with real estate agents in California reporting less demand from prospective Chinese buyers.
“We call it the Trump effect. It’s a combination of anti-Chinese political rhetoric, a clampdown on visa processing, and of course tariffs,” Carrie Law, CEO and Director of Juwai.com, said in a recent interview with CNBC. “The Trump effect is undercutting some of the primary drivers of Chinese demand for U.S. property, including buying homes for students who are studying in the U.S. and the country’s reputation as a safe investment.”
Canadians purchased $8 billion worth of profit, and were followed by Asian Indian ($6.9 billion), United Kingdom buyers ($3.8 billion), and Mexican buyers ($2.3 million).