The National Association of Realtors (NAR) 2022 Profile of International Transactions in U.S. Residential Real Estate [1] recently surveyed members about transactions with international clients who purchased and sold U.S. residential property from April 2021 through March 2022.
It was found that foreign buyers purchased $59 billion worth of U.S. existing homes over that span, an 8.5% increase from the previous 12-month period, halting a three-year skid in foreign investment in U.S. residential real estate. Foreign buyers purchased 98,600 properties, a number that was down 7.9% from the year prior, marking the fewest number of homes bought since 2009, when NAR began tracking this data. Nationwide, overall existing-home sales totaled 6.12 million in 2021–the highest annual level since 2006.
“For the second year in a row, restrictions and general caution tied to international travel during the pandemic slowed home buying by wealthier foreign buyers,” said NAR Chief Economist Lawrence Yun [2]. “Even so, domestic home buying demand was exceptional and, therefore, boosted home sales nationally.”
NAR’s analysis found [1] that foreign buyers who resided in the U.S. as recent immigrants, or who were holding visas that allowed them to live in the U.S—purchased $34.1 billion worth of U.S. existing homes, a 5.2% increase from the prior year, representing 58% of the dollar volume of purchases. Foreign buyers who lived abroad purchased $24.9 billion worth of existing homes, up 13.2% from the 12 months prior and accounting for 42% of the dollar volume. International buyers accounted for 2.6% of the $2.3 trillion in existing-home sales during that period.
The average ($598,200) and median ($366,100) existing-home sales prices among international buyers were the highest ever recorded by NAR–and 17.7% and 4.1% higher, respectively, than the previous year. The increase in foreign buyer prices partly reflects the increase in U.S. home prices, as the monthly average existing-home sales price rose to $374,300, up 10% from the prior period. At just over $1 million, Chinese buyers had the highest average purchase price, and nearly a third–31%–purchased property in California.
And while 31% of Chinese buyers focused on the Golden State, for the 14th straight year, Florida remained the top destination for foreign buyers overall, accounting for 24% of all international purchases. California ranked second (11%), followed by Texas (8%), Arizona (7%), and New York and North Carolina, tied at 4%.
The top 10 targets for international buyers included:
- Florida, which gained a three-percentage point market share from the prior period, likely due to the increase in Canadian buyers. Florida’s main buyers were from Latin America (39%) and Canada (25%). It was the top state destination among Canadian, Mexican, and Colombian buyers.
- California ranked second largest in foreign buyer share, at 11%, but this reading was five percentage points lower than in the prior period, likely due to the decline in Chinese foreign buyers due to the slow recovery of travel from Asia/Oceania.
- Texas ranked third among top foreign buyer destinations, with an 8% share. A little more that 30% of Texas buyers came from Latin America/Caribbean, and 27% from Europe. Texas was the top destination among Mexican buyers and the second top destination among Colombian buyers.
- Arizona was the fourth top destination, with a 7% share—two percentage points higher than the prior period, likely because of the increase in Canadian buyers, as nearly half of Arizona’s foreign buyers were Canadians. Arizona was also one of the top destinations among Mexican buyers.
- New York accounted for 4% of foreign buyer sales, with 31% coming from Asia/Oceania, and 22% from Europe. New York ranked as the second top destination among Chinese buyers.
- North Carolina also attracted 4% of all foreign buyers, with a one percentage point market share gain, while 38% of North Carolina’s foreign buyers were from Asia/Oceania, and 25% were from Latin America/Caribbean.
- Other major destinations for foreign buyers were New Jersey, Illinois, South Carolina, and Virginia.
Part of the uptick in international buyers was attributed to the lifting of pandemic-related travel restrictions, as with the progress on vaccinations, travel has started to pick back up.
“As of February 2022, the largest increase in the number of arrivals compared to one year ago were from Canada (+1.6 million), Western Europe (+407,248), and Mexico (+380,196),” found the report [1]. “Among the major groups of tourists, travelers from Asia had the smallest increase (+69,319).”
Cash remains king at the closing table, with all-cash sales accounting for 44% of international buyer transactions, nearly twice the rate (24%) of all existing-home buyers. Non-resident foreign buyers (60%) were twice as likely to make an all-cash purchase compared to resident foreign buyers (30%). Nearly seven out of 10 Canadian buyers (69%) made all-cash purchases, the highest share among foreign buyers. Asian-Indian buyers were the least likely to pay all-cash, at just 9%. Nearly six out of 10 Chinese buyers (58%), and a quarter of Mexican (27%), and Brazilian buyers (26%) made all-cash purchases.
“Due to rising interest rates, overall home sales will decline in the U.S. this year. Foreign buyers, however, are likely to step up purchases, as those making all-cash offers will be immune from changes in interest rates,” Yun said. “In addition, international flights have increased in recent months with the lifting of pandemic-related travel restrictions.”
Forty-four percent of foreign buyers purchased their property for use as a vacation home, rental property, or both. Sixty-four percent of international buyers purchased detached single-family homes and townhouses. Nearly half of international buyers (46%) purchased a home in the suburbs, while 29% bought a home in an urban area–both figures have held steady over the last five years. Five percent of foreign buyers bought property in a resort area, down from 17% in 2012.
NAR’s Profile of International Transactions in U.S. Residential Real Estate [1] was based on an online survey sent to 150,000 randomly selected REALTORS and to members of local associations which also conducted surveys of foreign buyers, and was conducted from April 11-May 9, 2022.