U.S. homebuyers went on a buying spree during much of the coronavirus pandemic‘s first year. International buyers did just the opposite, though.
Even with virtual options in place for property tours, sales of U.S. homes to foreign buyers fell by 31% from April 2020 to March 2021, according to the National Association of Realtors.
International buyers purchased 107,000 properties, marking the lowest unit volume and lowest dollar volume since 2011.
“The big decline in foreign purchases of homes in the U.S. in the past year is no surprise, given the pandemic-induced lockdowns and international travel restrictions,” Lawrence Yun, NAR’s chief economist, said in a release. “Yet, even with the absence of foreign buyers, the U.S. housing market strengthened solidly.”
China, Canada, India, Mexico and the United Kingdom were the top five countries in sales dollar volume for U.S. residential properties. That dollar volume, however, was down at least 50% for buyers from China, Canada and Mexico. The U.K. was the only country among those five to see an increase from the year before.
Chinese buyers are particularly important to watch, as China had taken over as the lead demand for U.S. housing in the early part of the last decade but then fell back slightly during the Trump administration. Now Chinese buyers are apparently surging back in.
“There has been quite a positive impact on the demand from the Biden boost, as the U.S. is being perceived as much more predictable now, and visas are also much easier to be obtained,” said Georg Chmiel, executive chairman of Juwai IQI, a home listing site in China much like Zillow in the U.S. “On the other side, and now that we are over a year dealing with the Covid pandemic, it has lessened the impact on the buying decisions because flights to the U.S. are possible.”
Home prices are now about 15% higher than they were pre-pandemic, but that may actually be an incentive for international buyers.
“Rising prices creates demand because people start to fear they’re missing out,” said Chmiel.
International buyers still believe the U.S. is a good investment because by global comparison homes are still quite affordable. Looking at properties by square foot, U.S. homes are much less expensive than homes in Hong Kong or London, for example.
International buyers, as well as everyone else, are also far more comfortable now with virtual homebuying.
The number of virtual tours has increased dramatically across all real estate platforms, both in the U.S. and abroad. Juwai reports having 5,000 virtual tours available and being used right now.
“So if that’s an indication of the comfort, then certainly this has increased, because people are now used to do far more things online shopping, education, also working from home online, and that also had an impact on the property market,” said Chmiel.
The top destinations for international buyers have not changed much, despite the pandemic. For the 13th straight year, Florida was in the lead, with 21% of all international purchases. California ranked second (16%), followed by Texas (9%) and Arizona (5%), with New Jersey and New York tied at 4%.
International buyers continue to be driven by high potential returns on investments as well as seeing the U.S. as a safe haven for cash. More recently, Chinese buyers especially have purchased homes for their children, hoping to take advantage of higher education opportunities in the U.S.
“As travel restrictions loosen and foreign students return to U.S. colleges in the upcoming year, there is likely to be some growth in foreign buying of U.S. real estate,” Yun said. “High home prices and the ongoing lack of inventory could, however, pose a challenge for buyers.”
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