Real Estate: Foreign Buying of U.S. Properties Has Glim 2020 Outlook
COVID-19 is sparking a critical decline of overseas buyer interest.
Foreign buyers have historically been a large part of the United States real estate market. Lately, however, the size and scope of foreign buyers has been declining. Even worse, the Coronavirus pandemic could exacerbate this trend as international buyers step away from the market.
In the 12-month period ending in March, 154,000 homes were purchased by international buyers, down 16 percent from the previous year. This represents the smallest number of homes purchased by international buyers since 2011. The number of buyers is also past its peak, with 2020 being the third year in decline. International buyers accounted for $74 billion worth of residential real estate this year, down from $121 billion two years ago.
China was the largest buyer of any other foreign country, followed by Canada, Mexico, India and Colombia. China may lose its number one spot, with fewer Chinese buyers purchasing United States residential properties. One major cause of this trend is the Chinese government’s restrictions. According to chief economist at the National Association of Realtors Lawrence Yun, “The Chinese government has become much more restrictive about how much cash they can take out of the country…Just the sense the government may be watching them has reduced the number of Chinese buyers here in the U.S.”
As seeing a home in person is often a crucial step when purchasing a home, the pandemic has scared off many foreign buyers from the U.S. market, especially with the recent spike in cases in the majority of states, sparking many fewer in-person home visits. Although incentives for foreign buyers have decreased, the trend does not have to stagnate. Future events such as the U.S. presidential election could change foreign perceptions and demands of the United States. Regardless of future events, domestic buyers may have the advantage of greater supply and cheaper interest rates, and now may be the time for many U.S. citizens to buy a home.
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