Sales to foreign buyers declined to the lowest level in a decade between the time the pandemic began through March 2021, according to the National Association of Realtors’ 2021 Profile of International Transactions in U.S. Residential Real Estate.
Foreign investment was down 31 percent between April 2020 and March 2021 compared to foreign purchases during that same time in 2020. The value of the real estate purchased by foreign buyers from China, Canada and Mexico, which are among the top three countries for U.S. purchases, dropped by at least 50 percent when comparing those same periods. But real estate experts who work with international buyers say that’s about to change.
“International buyers’ confidence in investing in the U.S. keeps increasing as they find shelter in the American economy,” Andre Perez, a real estate agent with Compass in D.C., wrote in an email. “I think the interest continues to increase for multiple reasons, including but not limited to the low-interest rates in the nation, the fact that the U.S. is doing well managing the pandemic, the general U.S. economy and the instability in other countries.”
Perez says about 25 to 35 percent of his buyer clients were foreign before the pandemic, either moving to the United States or in the country with a G-4 or other visa. About 25 percent of those buyers were investors who don’t intend to live in the property.
“The international buyers’ presence has increased due to the backlog of scheduled relocations for the past 18 months,” Perez wrote. “All that backlog started to unfold in the second and third quarters of 2021 and will most likely continue in 2022.”
In Miami, the real estate market flipped from a majority of foreign buyers before the pandemic to a majority of domestic buyers now, Danny Hertzberg, a real estate agent affiliated with Coldwell Banker Realty’s The Jills Zeder Group based in Miami Beach, wrote in an email. He wrote that about 50 percent of foreign buyers in Miami purchase a home for part-time use, 25 percent as an investment and 25 percent for a full-time home.
“The interest from foreign buyers is significant right now and there is pent up demand due to the travel restrictions,” Hertzberg wrote. “Some of our clients went through the hurdle of traveling to another country to quarantine for two weeks in order to travel to Miami, but then they had to quarantine on the way back, so a month was lost just to look at property. This deterred many buyers, who are excited to come now that travel restrictions are lifted.”
Hertzberg said he thinks that foreign demand in Miami will tend toward condos, while the domestic demand over the past year was mostly for single-family houses.
In New York City, foreign purchases peaked in 2014 at about 30 percent of all sales, Maria Belen Avellaneda, a real estate agent with Compass in New York, wrote in an email. That number has declined steadily to about 15 percent today. Among her international clients, many of whom are from Latin America, 65 percent buy full-time residences, 15 percent buy second homes and 20 percent buy investment properties.
“Foreign buyers who can afford luxury units tend to look for new developments in Manhattan with multiple amenities and open views,” Avellaneda wrote. “However, most foreign buyers have average budgets below $1 million and have been actively purchasing in Queens and Brooklyn where the price per square foot is more attractive. I expect that with the reduction of travel restrictions, international buyers will soon play a much more active role in the market.”
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