Foreign Homebuyers Abandoned The US, Yet China Is Racing Back

Compass Cambodia report, July 27th - During the first year of the coronavirus pandemic, homeowners in the United States went on a buying spree. International customers, on the other hand, did the exact opposite.

According to the National Association of Realtors, sales of U.S. homes to international purchasers declined by 31% from April 2020 to March 2021, despite the availability of virtual property tours.

International purchasers bought 107,000 residences, the lowest number of units and dollar volume since 2011.

"The big decline in foreign purchases of homes in the U.S. in the past year is no surprise, given the pandemic-induced lockdowns and international travel restrictions," Lawrence Yun, NAR's chief economist, said in a release. "Yet, even with the absence of foreign buyers, the U.S. housing market strengthened solidly."

China, Canada, India, Mexico, and the United Kingdom were the top five countries in terms of residential property sales dollar volume in the United States. Buyers from China, Canada, and Mexico, on the other hand, saw their dollar volume drop by at least half. The United Kingdom was the only one of the five countries to have a rise from the previous year. It's especially crucial to keep an eye on Chinese purchasers, as they took over as the leading demand for U.S. housing in the early part of the last decade, but then slowed slightly under the Trump administration. Now, it appears that Chinese purchasers are resuming their purchases.

"There has been quite a positive impact on the demand from the Biden boost, as the U.S. is being perceived as much more predictable now, and visas are also much easier to be obtained," said Georg Chmiel, executive chairman of Juwai IQI, a home listing site in China much like Zillow in the U.S. "On the other side, and now that we are over a year dealing with the Covid pandemic, it has lessened the impact on the buying decisions because flights to the U.S. are possible."

Although home prices are presently around 15% higher than they were before the pandemic, this may be an advantage for international purchasers. "Rising prices creates demand because people start to fear they’re missing out," said Chmiel.

International purchasers continue to believe that the United States is a good investment because properties are still reasonably priced in contrast to other countries. Homes in the United States are substantially less expensive per square foot than homes in Hong Kong or London, for example.

International purchasers, like everyone else, are much more at ease with virtual homebuying now.

Virtual tours have increased tremendously across all real estate platforms, both in the United States and internationally. According to Juwai, there are currently 5,000 virtual tours available and in use.

"So if that's an indication of the comfort, then certainly this has increased, because people are now used to do far more things online shopping, education, also working from home online, and that also had an impact on the property market," said Chmiel.

Despite the pandemic, the top locations for overseas buyers have remained relatively same. Florida led the way for the 13th year in a row, accounting for 21% of all international purchases. California came in second (16%), followed by Texas (9%) and Arizona (5%), with New Jersey and New York equal for fourth place at 4%.

International purchasers are still attracted to the United States because of the large potential returns on investments and the perception that it is a safe haven for their money. Chinese purchasers, in particular, have recently purchased homes for their children in the hopes of taking advantage of higher education prospects in the United States.

"As travel restrictions loosen and foreign students return to U.S. colleges in the upcoming year, there is likely to be some growth in foreign buying of U.S. real estate," Yun said. "High home prices and the ongoing lack of inventory could, however, pose a challenge for buyers."

Source: Compass Cambodia comprehensive arrangement, cnbc

Editor: Malinda         Chief Editor: Sunnie         General in Chief/Executive Producer: Nicole

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