Despite the political reality in the U.S., foreign buyers are still looking to buy properties. In fact, from April 2017 to March 2018, foreign buyers purchased $121.0 billion of residential property in the U.S.
In the U.S. there are no special restrictions when it comes to buying a property as a foreigner. But is this the only reason? What are they buying? In this article we bring you an overview of the reasons why, despite the current trade war, they keep buying property.
The top 5 foreign buyers in the U.S.
In 2018, Chinese accounted for roughly 25% of foreign investment in the U.S. Residential real estate. In fact, Chinese investors have been the biggest buyers of U.S. residential properties for six consecutive years. However Chinese are not alone.
On the top foreign buyers in the U.S. we see that Canada, the United Kingdom, India, and Mexico are also big players in terms of business volume.
Foreigners are looking to buy more stable investments
According to Chris Marlin, the President of Lennar International, foreign buyers are looking to buy long-term, stable investments.
When we consider Chinese buyers, he also stated that they are looking for properties in California, Florida, Texas and along the East Coast. Note that in California there was a slight decrease as they start looking for more affordable houses.
During this interview, he also referred that foreign buyers from Japan are moving away from a yield focused perspective and turning themselves to more on stability and self-use.
According to Nars report, Florida was the major destination among Canadian and U.K. buyers, and Texas was more appealing to Mexican buyers.
52% of foreign buyers bought property as a primary residence
There are several reasons why a foreign buyer would look for a property in the U.S. In fact, 52% of foreign buyers bought a property as a primary residence.
Foreign buyers intended property use per reason Source: NARS 2019
If we explore this data a little bit further, we see that 45% of Chinese bought a property as a primary residence but Among the top five buyers, Chinese buyers were most likely to purchase the property for the use of a student.
Intended property use for foreign buyers in the US according to NARS reports 2019.
This data also show the trend mentioned by Chris Marlin, that refers that there is a change on consumer behaviour.
The primary reason investors from the China had for investing in residential real estate was using the home as a primary residence or using the house as an investment.
Foreigners are also moving due to job and educational opportunities
Foreign buyers are not only looking for more stable investments but they are also looking for job and educational opportunities.
We all know that U.S. education system can be expensive, but we also know it's pretty famous and can grant your foreign buyers kids a great job opportunity. Chinese buyers are strong believers of this conclusion and it is not a coincidence that, among the top 5 foreign buyers in the U.S., they are the ones who display more will to buy a house for a student (7%).
It is still relevant to mention that, as expected, the non-resident buyers purchased more properties for vacation and rental when compared to resident foreign buyers.
Last but not least, it's important to refer that geography and cultural similarities are also amongst the main reasons why foreigners look for the U.S. Canadians, British and Mexicans are often moving to the U.S. due to the fact that they have family or friends in place. On the other hand, they are closer to the country which means that in case of investment they also have a trustful person in place. This makes it a lot easier in terms of property management.
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