The US real estate market has historically attracted people from around the world looking to live, work, play, study or invest. To demystify the buying process, the Coldwell Banker brand has curated a collection of guidelines and best practices for international clients seeking to purchase property in the United States.
The coronavirus pandemic and travel restrictions dampened international demand for U.S. properties over the past two years.
According to the National Association of Realtors (NAR), the sales volume generated by international homebuyers in 2021 hit its lowest level since 2011. International buyer purchases accounted for just 1.6% of existing home sales, down from a peak of 5.2% in 2017. While transactions further decreased in the most recent period, dollar volume of foreign buyer purchases rose 8.5% to $59 billion in the period ending March 2022. Now that travel bans have eased, the expectation is that there will be a surge in pent-up international demand released for U.S. properties.
Highlights
$59 Billion: Dollar volume of foreign buyer residential purchases during April 2021-March 2022 (2.6% of $2.3 trillion of the dollar volume of existing-home sales)
98,600: Number of foreign buyer existing-home purchases during April 2021-March 2022 (1.6% of 6.06 million existing-home sales)
57%: Foreign buyers who reside in the United States (recent immigrants; less than two years at the time of the transaction) or non-immigrant visa holders (Type B)
Top Foreign Buyers
- Canada (11% of foreign buyers, $5.5 B)
- Mexico (8% of foreign buyers, $2.9 B)
- China (6% of foreign buyers, $6.1 B)
- India (5% of foreign buyers, $3.6 B)
- Brazil (3% of foreign buyers, $1.6 B)
- Colombia (3% of foreign buyers, $1.0 B)
Strong U.S. Luxury Market Fundamentals
Historically low inventory, rapid price gains, and a flood of new wealth entering the U.S. property market have converged over the past two years to create a strong-yet-challenging buying environment for international buyers.
According to The Report: 2022 published by the Coldwell Banker Global Luxury program, 2021 sales of luxury single-family homes rose 14.5% while prices increased 20.3% from 2020. Sales of attached luxury homes saw a more dramatic uptick of 29.6% year-over-year and a 16.6% increase in prices.
*In Emmet County, so far this year (11/3/2022) luxury homes have accounted for 20% of the sales. (Luxury sales are classified as sales prices of $750,000 or higher). In 2021, luxury sales made up 16% of all sales. (Data provided by the NMMLS and interpreted by Coldwell Banker Fairbairn Realty). Luxury sales in 2020 only made up roughly 12% of all home sales in Emmet County equating to an approximate 5% growth year-over-year in luxury real estate sales.
Due to years of underbuilding and a decline in listings, supply has also not kept pace with demand. However, the number of available listings is expected to gradually increase this year as new sellers come forward and post-pandemic new construction ramps up. The Federal Reserve has also slowly been raising interest rates this year to curb inflation, resulting in a stronger dollar. This could also have a slight cooling effect for domestic buyers who are financing their real estate purchases, allowing more opportunities for international buyers.