Foreign housing market purchases are great investments for foreign nationals who look for vacation homes or safe heavens away from their lands. The US has been an excellent hub for foreign housing investments in the past few decades. But are the houses in America growing at the same pace as the investors and buyers? How does it impact local housing prices, and what does it mean for your real estate business?
Building and maintaining homes for sale to overseas customers is a booming market in the US, and as a real estate property manager, you must take notice of it. According to statistics by NAR and international reports, the Canadian and Chinese foreign homebuyers are in maximum number in the US. But who are the rest, and how are they affecting the markets?
How foreign purchases impact home prices
Popular locations and urban places closer to all kinds of modern amenities are top-rated among overseas investors regarding home buying. According to a research paper published by the National Beurue of Economic Research (NBER), the average American home price increased by 8% in those zip code areas in any place that had Chinese home buyers and foreign investors. This was large from 2012 to 2018, and it became increasingly more complex for local Americans to afford homes in their own regions. According to Seattle Times reports, at one point in 2016, Seattle became the most prominent Chinese homebuying region, and it saw the maximum number of investments.
Much like the Chinese investors, many other international buyers heavily invest in the American housing market and push up the average home price in many regions. Penn Today reports mentioned that they bought as much as $11.5 million worth of US homes between 2019 and 2020. That is a major chunk of the total number of US homes.
Who are foreign real estate investors?
Between 2020 - 2021 the number of foreign home buyers increased to a whopping $54.5 billion. Among these, 58% of the people already reside in America; the others are overseas buyers. But who are these people? What does the National Association of Realtors (NAR) research say about it? According to NAR reports, there are five main foreign homebuyers,
Canada makes up 8% of foreign buyers which amounts to $4.2 Billion
Mexican investments make up 7% of foreign buyers which is around $2.9 Billion
Chinese investors have decreased a little post-pandemic and now stand at 6% of foreign buyers and amount to $4.5 Billion
Indian investments amount to 4% of foreign buyers, and the value is at $3.1 Billion
The United Kingdom home investors amount to 4% of foreign buyers, and the value is at $2.3 Billion
International buyers dropped out during the pandemic
International home investors and buyers were the first to rush out of the American market after the pandemic. According to CNBC news reports data, foreign investments fell by a steep 31% during the first year of the pandemic. International buyers only bought around 107,000 properties, which was the lowest number of sales in the last decades. This also meant more houses and property units were available at affordable prices for the local American home buying crowd. Due to international travel restrictions, the Chinese were the first to move out of investments among other international buyers.
How can real estate firms benefit from it?
Yes, some international investors stopped investing in US homes during the pandemic due to reduced economic activities and low funds. But come 2022, the market is slowly returning to its original state. But according to recent reports by CNBC, the Chinese are the fastest to get back into the market. The general home prices are 15% higher now than they were during the pandemic and much of it has to do with the increasing international sales post-pandemic. If you are a real estate business owner or property manager, this rising market should be of great interest to you.
This is an ever-increasing market, and you need to tap into it. This crowd is primarily remote, and you need to invest in the proper selection of technology in project management to handle this new business. Most of these buyers are dealing from remote locations, and as property managers, you hardly have any chance to contact them directly to conduct management. Getting the right CRM or property management software can quickly help streamline the process and help smoothen the business process overview. Other PropTech implementations like virtual home tours and digital sales and contract negotiations can also help drive sales. You need to use these techs to get a hold of this situation and plan your strategy and leadership accordingly.
What is influencing foreign investors to buy U.S. homes?
We did learn all about the stats and everything you can do to get a hold of this international home-buying crowd, but what factors influence this market? Let us find out.
Attractive debt terms
The debt terms in America are much better than in many other foreign locations, and the amenities available in American cities make it worth their money. US lenders offer great deals on home mortgages regarding a 10 - 30 year lock-in term and drive up the international real estate sales.
Low property values
The average home price in America is much lower than in any other first-world country, which is another crucial player in international home sales. Though paying $200 per square foot for an American home might seem like a significant investment for an average American, Forbes reports have said this is a major attraction for a UK-based investor. Why? They pay thousands of dollars for the same square feet houses, and these deals make for attractive offers for such international buyers.
Wrapping Up
Want to understand what these market trends mean for you and how you can work with them to help your real estate business boom? Our advisory services at Assetsoft can guide you every step of the way. Our team does everything from planning strategy and leadership to providing project management services and technology implementation plans. We have years of experience handling and working with these American real estate market trends.
Talk to us to find out more!