Foreign buyers flood US real estate , but buy cheaper homes
The appetite for U.S. real estate continues to flourish, but international buyers are shifting their sights from luxury to less-pricey properties. This may be due to overall higher home prices, along with a stronger U.S. dollar, which both cost foreign buyers more at the negotiating table. There are also fewer nonresident foreigners investing in the market.
Investors in China are increasingly investing in properties overseas, viewing real estate as a relatively safe investment vehicle for their renminbi. They are the #1 foreign investors in both the United States and Australia, and are pouring investments in many of the wealthiest countries around the globe. Some reasons behind this growth in real estate investments include current volatility in the Chinese domestic stock market, the growing divergence between China’s renminbi and international currencies, increasing appetite for portfolio diversification, the Chinese government’s recent approval of the Qualified Domestic Individual Investor Program (QDII2), and a desire to buy homes for their children who are studying abroad.
How International Issues Affect Foreign Investment in U.S. Real Estate
There’s no doubt that international buyers love U.S. real estate. In 2015, 15.4 percent of allcommercial real estate buyers in the U.S. were from overseas, according to financial and professional services firm Jones Lang LaSalle.
On the residential side, the National Association of Realtors reports international buyers purchased 4 percent of existing homes sold in the U.S. in 2015, which made up 8 percent of the total dollar amount of existing homes sales for the year at $104 billion. The biggest foreign residential buyers in 2015 were from China ($28.6 billion), Canada ($11.2 billion), India ($7.9 billion), Mexico ($4.9 billion) and the U.K. ($3.8 billion), according to a study examining Chinese real estate investment conducted by the nonprofit Asia Society and real estate economics firm Rosen Consulting Group.
10 countries racing to buy American homes
International homebuyers are attracted to the United States for a number of reasons. These include favorable housing prices, good weather, the country’s relative economic stability and an attraction to America in general. As the housing market improved and home prices rebounded, the interest of foreign buyers in U.S. properties has soared.
Foreign Buyers of U.S. Real Estate: By the Numbers
It’s no secret that foreign investors, from sovereign wealth funds to insurance groups, have been eager to park their money in U.S. commercial real estate lately. A new report from commercial real estate services firm Newmark Grubb Knight Frank breaks down exactly how much money was spent, who was spending it and what they were spending it on in recent months.