Fewer homes in the United States are being purchased by people from other countries, marking the largest decline on record, according to a survey by the National Association of Realtors released this week.
International buyers' purchases came to $121 billion in the fiscal year ending in March, down from $153 billion the year before, marking a 21 percent decline, reports The Wall Street Journal.
Foreign purchasers generally make up just a small part of the housing market in the United States, but tend to concentrate their efforts in high-end places such as Manhattan, San Francisco, Seattle, Miami, and Orange County, California, making it difficult for U.S. buyers to buy property in those locations.
Further, people from other countries are more likely not only bid above the asking price on the properties, but they often pay in cash, according to real estate agents in the pricier markets.
Because of the foreign influence, local buyers must make larger down payments and pay more for the properties.
Lawrence Yun, a chief economist at NAR, said the decline could reflect the growing tensions between the United States and other areas of the world, or the talk of trade wars.
Sellers, however, have welcomed foreign interest and some developers have marketed their higher-end condos to investors from other countries.
“This might be the first time in my career that I’m seeing more Chinese sellers than buyers,” John Chang, a broker-owner at Engel & Völkers in New York City, told The Wall Street Journal.
Chang said Chinese news coverage is scaring away some buyers. The coverage includes editorials saying that it is not safe to invest in the United States and articles about real estate developments, financed by Chinese investors, that have ended in bankruptcy.
The new report shows Chinese buyers' purchases fell 4 percent, to $30.4 billion, while still remaining at the top of the list. Canadians were the second-highest buyers, but their purchases plunged by 45 percent to $10.5 billion.
Foreigners are also paying less for what they are buying. Last year, the median price for a property bought by someone out of the country was $302,300, but went down to $292,400 this year.
Chinese buyers, however, bought the most expensive properties, coming in with a median price of $439,100. Most buyers from China, at 40 percent, bought property in California.
However, the Chinese government has tightened its restrictions and now allows just $50,000 to be taken out of the country, while requiring banks to report where the money is going. Real estate purchases are not deemed to be acceptable, while tuition spending is.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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