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More foreigners are buying homes in the US with Florida the most popular state

by Ray Clancy on July 25, 2017

Despite concerns about immigration policy and other political uncertainty, the US is still a popular locations for people buying a holiday home, perhaps with a view to retiring the in the country.

There has been a surge of foreign buyers compared to a year ago with Canadians in particular buying more homes with Florida the most popular state, new research has found.

(jcpjr/Bigstock.com)

Indeed Florida is the most popular state for overseas buyers, followed by California and Texas, with Mexicans favouring the southern star state, according to the figures from the National Association of Realtors (NAR).

Buyers from China exceeded all countries by dollar volume of sales at $31.7 billion, which was up from last year’s $27.3 billion and the $28.6 billion recorded in 2015, a new survey high. Chinese buyers also purchased the most housing units for the third consecutive year at 40,572, up from 29,195 in 2016.

Although China maintained its top position in sales dollar volume for the fourth year in a row, the significant rise in foreign investment in the survey came from a massive hike in activity from Canadian buyers. After dipping in the 2016 survey to $8.9 billion in sales from $11.2 billion in 2015, transactions from Canadians this year totalled $19 billion, a new high for Canada.

According to Lawrence Yun, NAR chief economist, Canadians are choosing to buy property in US markets because they are more affordable than at home. While much of the US continues to see fast price growth, home price gains in many cities in Canada have been steeper, especially in Vancouver and Toronto.

After Canada at $19 billion, the next biggest investment was from buyers from the UK at $9.5 billion, Mexico $9.3 billion and India $7.8 billion, with all these nations buying more than they did a year ago.

This year’s survey once again revealed that foreign buying activity is mostly confined to three states with 22% in Florida, 12% in California and 12% in Texas. New Jersey and Arizona saw 4% each of foreign investment. Florida was the most popular state for Canadian buyers, Chinese buyers mostly chose California, and Texas was the preferred state for Mexican buyers.

Some 284,455 properties were bought by foreign buyers, up 32% from 2016 and purchases accounted for 10% of the dollar volume of existing home sales, up from 8% in 2016.

‘The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of US property over the past year. While the strengthening of the US 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 beliefs that the US is a safe and secure place to live, work and invest,’ Yun explained.

‘Inventory shortages continue to drive up US home values, but prices in five countries, including Canada, experienced even quicker appreciation. Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the US and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future,’ Yun explained.

Foreign buyers typically paid $302,290, which was a 9% increase from the median sales price in the 2016 survey at $277,380, and above the sales price of all existing homes sold during the same period at $235,792. Approximately10% of foreign buyers paid over $1 million, and 44% of sales were all-cash, down from 50% in 2016.

Looking ahead, Yun believes the gradually expanding US and global economies should keep foreign buyer demand at a robust level. However, it remains to be seen if both the shortage of homes for sale and economic and political headwinds end up curbing sales activity to foreigners.

‘Stricter foreign government regulations and the current uncertainty on policy surrounding US immigration and international trade policy could very well lead to a slowdown in foreign investment,’ he added.

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