USA

Foreign Investment In US Real Estate Falls To A Decade Low: NAR

Despite a booming US real estate market, foreign buyers have been sitting this one out. National Association of Realtors (NAR) data shows foreign buyers made a big drop in the year ending March 2021. The pandemic didn’t have much of an impact on budgets, but fewer buyers came to market. 

Foreign Buyers Spent 27% Less On US Real Estate

The dollar value of US real estate purchased by foreign investors continued to slide. NAR estimates non-residents purchased $54.4 billion of real estate in the year ending March 2021, down 27% from a year before. This works out to 2.8% of the $1.96 trillion total existing-home sales made over the same period. Foreign dollar investment into residential real estate peaked in 2017 at $153 billion, and has slid lower ever since.  

Foreign Buyer Dollar Volumes For US Real Estate

The dollar volume of homes purchased by foreign buyers in the US.

Source: NAR; Better Dwelling.

Fewer Foreign Buyers Want US Real Estate

The number of foreign buyers slid more than the dollar volume. There were 107,000 foreign buyers in the year ending March 2021, down 31% compared to the year before. This works out to ~1.8% of the transactions over the period. Similar to the dollar volumes, the number of sales also peaked in 2017 at 284,500 homes.

Top 5 Foreign Buyers of US Real Estate

The number of homes purchased by foreign buyers from the top 5 countries.

Source: NAR; Better Dwelling.

The top five countries represent a significant share of all foreign buyers. Canadians were the largest share, representing 8% of transactions. It was followed by Mexico (7%), China (6%), India (4%), and the United Kingdom (4%). Together these markets represent 29% of all foreign purchases. 

Foreign Buyers Spend More Than Locals

Foreign buyers typically scoop more expensive homes than typical, it would seem. The median purchase price for a US existing home was $326,300 in March, the last month of the foreign buying data. Foreign buyers had a median purchase price of $351,800 in the year ending March 2021. That’s significantly higher, which makes sense since these are often people with enough scratch for a second home in another country. 

Median Purchase Price Of US Real Estate Bought By Foreign Buyers

The median purchase price of US homes purchased by foreign buyers.

Source: NAR; Better Dwelling.

Regarding the top 5 groups of foreign buyers, some paid even larger premiums. The median price for buyers from India ($538,900), China ($476,500), and Canada ($400,900) were noticeably higher. 

Foreign buyers are tapering, continuing a longer-term market trend. That isn’t to say the pandemic didn’t have an impact, it most certainly did. However, the impact only seems to apply to lower-income foreign buyers, since the median purchase price made a significant climb. 

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16 Comments

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  • Ex 2 months ago

    Its not as profitable in the us as in Canada, because of high taxes, capital gain. Prices went up, making real estate risky investment.
    Rules are completely different. Its a bubble territory now in the United States.
    its not easy to get any type of mortgage now days, general rule – it should be 1/4 of your income ( not less).

    • Paul 2 months ago

      Actually capital gains on selling properties in the US isn’t as bad as you think it is. This site did a very good breakdown at the beginning of the year when people in Canada first started talking about changing taxation rules for primary residence. Maybe you should read it.

      • ex 2 months ago

        Capital gain exists on matrimonial homes in the US, zero in Canada.
        On matrimonial home in the US you pay capital gain, deduction $250 k ( max $500 k per family) after 2 years of living and that house should be your primary residence.
        In Canada ( no capital gain on matrimonial homes), people buy 2-3 houses and move from one to another for a short time paying zero in taxes.

      • Ex 2 months ago

        We have had several houses in the US and Canada (GTA), as primary and none primary residence and investments. We have accountants in both countries and know taxations inside out. You have to pay a lot of taxes in the US compere to Canada in RE when you start speculating!

  • Mike 2 months ago

    Wanted to buy house in USA untill I found out you pay 30% of the sale price in taxes when you sell the property if your a non- resident

    • Jim 2 months ago

      It’s 10% withholding, that can be recouped. You can also file Form 8288-B for a reduced withholding rate. They just want to make sure you aren’t skipping out on taxes. I think it’s 25% withholding in Canada now.

      • Ex 2 months ago

        if you are in high income bracket its not 10% , its added to your income and can be as high as over 37% depends on the state you are in.

        If its low gain and your income is low, it might be 10%.

        • RW 2 months ago

          You’re thinking of income tax. It’s a *withholding* tax. Your tax liabilities are still to your own local country, and your capital gains in the US still apply.

          See a tax professional that deals with cross-border clients, otherwise there’s a lot of terrible advice telling you to accept double taxation on profit.

      • LM 2 months ago

        If you work for 1099 in the US capital gain added to your income. If you work for salary it is also added to your income. If its investment also you are using 1099 and with real estate its hard to get passthrough taxations. Only “like kind” exchanges are avoiding capital gains, but you also have to pay capital gain tax at the end.

        Property taxes are enormous in the US for anything above 2 mlns. We live in Manhattan and pay 40 k +a year for our townhouse.

        Uncle Sam won’t let you be off the hook so easy with speculations and flipping real estates. Its one of the reasons why bubble bursts in the us in circles.

        • RW 2 months ago

          A 1099 for someone with no US business can sign a declaration waiver. If you meant a 1099-DIV, Canadians can file for an adjustment to a reduced 15% from 30% on the income. 15% = less than 25% at the capital gains rate.

          • LM 2 months ago

            1099 for someone who have investment businesses in both countries and also working in the US.

          • Ex 2 months ago

            For someone who works in the us, not Canada.
            US or Canadian citizens or any other country citizens working in the US and buying and selling properties in the US.

          • LM 2 months ago

            RW, we were talking about two different things. My wife and I live and work in the United States and we pay taxes in both countries. Our primary residence now, United States. Our biggest portion of taxes payed here.

          • LM 2 months ago

            RW, you have no idea what I can and can not afford now.
            The best decision of my life was to take my wife and two kids and move out of Canada after almost ten years of financial strangles.

    • Ex 2 months ago

      Mike, you are absolutely right, especially if you are in high income bracket.

      • RW 2 months ago

        It’s absolutely incorrect, but whatever.

        There’s a reason cross-border investors have cross-border accountants, and people that can’t afford cross-border investments talk each other out of them on the internet.

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