Foreign investment in U.S. residential real estate has skyrocketed with overseas buyers and recent immigrants purchasing US$153.0 billion worth of residential property in the 2016-17 financial year, a 49% jump from the previous year, according to the National Association of Realtors (NAR).
This year is the highest-ever, surpassing 2015, when $103.9 billion worth of residential real estate was sold to foreigners and recent immigrants.
“The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of U.S. property over the past year,” said Lawrence Yun, NAR’s chief economist.
He added, “While the strengthening of the U.S. dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their belief that the U.S. is a safe and secure place to live, work and invest.”
Although China maintained its top position in sales dollar volumes for the fourth straight year, a significant rise in foreign investment came from a massive hike in activity from Canadian buyers.
After dipping in the 2016 survey to $8.9 billion in sales ($11.2 billion in 2015), transactions from Canadian buyers this year totaled $19.0 billion – a new high.
Yun attributes this notable rise to the fact that, though expensive, U.S. markets are still more affordable than home markets in Canada. Home price gains in many cities in Canada have been steeper than in the U.S., especially in Vancouver and Toronto.
Foreign buyers typically paid $302,290, a 9% increase from the median sales price in the 2016 survey ($277,380) and above the sales price of all existing homes sold during the same period ($235,792). Approximately 10% of foreign buyers paid over $1 million, and 44% of transactions were all-cash purchases (50% in 2016).
Florida, California and Texas are the top choices for foreign buyers with nearly half of home sales happening in these three states.
Florida took 22% of all foreign investment in residential real estate. The Sunshine State was followed by California and Texas (each at 12%), and then by New Jersey and Arizona (4% apiece).