Foreign home buying has accounted for a significant amount of activity in certain markets throughout the country. In fact, one of the most popular markets for foreign home buying has been right here in South Florida. Miami, FL has historically been one of the top cities in the nation for foreign real estate investments.
However, foreign home buying in the United States fell to its lowest level on record in the year ending in March 2023, according to the National Association of REALTORS® (NAR). International buyers purchased 84,600 U.S. homes in that period, down 14% from the prior year. The dollar volume of residential real estate purchased by these buyers fell 9.6% to $53.3 billion. Not surprisingly, many of the reasons why we have seen a slowdown in foreign home buyers are similar to why we have also seen a slowdown in domestic home buying. We discuss below.
Why is foreign home buying down?
There are a number of factors contributing to the decline in foreign home buying in the United States. These include:
- Rising home prices: The median price of a home in the United States has increased by nearly 50% since 2020, making it more difficult for foreign buyers to afford to purchase a home.
- Rising mortgage rates: Mortgage rates have also increased significantly in recent months, making it more expensive for foreign buyers to borrow money to purchase a home.
- Weaker currencies: The currencies of many countries have weakened against the US dollar in recent years, making it more expensive for foreign buyers to purchase a home in the United States.
- Travel restrictions: The COVID-19 pandemic has made it more difficult for foreign buyers to travel to the United States to view homes in person.
- Government restrictions: Some foreign governments have imposed restrictions on capital outflows, making it more difficult for buyers to purchase homes abroad.
Implications for the U.S. housing market
The decline in foreign home buying could have a number of implications for the US housing market. On the one hand, it could lead to a decrease in demand for homes, which could put downward pressure on prices. On the other hand, it could also lead to an increase in supply, as foreign buyers who already own homes in the U.S. may decide to sell them. Of course, both an increase in supply and potentially lower prices would be welcomed news for American home buyers.
Summary
Overall, the decrease in number of foreign home buyers will certainly have an impact on the housing market. In particular, markets such as Miami, FL have a higher exposure to foreign buyers than most other markets. Of course, the impact of fewer foreign home buyers may be offset by the fact that fewer homeowners are selling their homes. Nonetheless, this is a dynamic that will need to be monitored moving forward for the housing market.
Are you looking to buy or sell a property in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, don’t forget to download the free Florida Home Search app for your mobile device & take the power of the South Florida MLS with you!
