(Bloomberg) — Foreign purchases of US residential real estate fell 36 percent to the lowest annual rate since 2013, as slowing overseas economies, trade wars, and the strong dollar put a chill on demand.
Foreign buyers spent $77.9 billion on homes in the United States during the 12 months that ended March 31, down from $121 billion during the same period a year earlier, according to the National Association of Realtors’ annual survey on international transactions. The data include foreigners who reside outside the United States and those who are recent immigrants or temporary visa holders. Nonresident buyers spent $33.2 billion, while new arrivals bought $44.7 billion. Foreign buyer purchases peaked in the period ended March 31, 2017, at $153 billion.
For an overseas buyer, a US home isn’t the bargain it once was, with rising prices and foreign currencies losing value against the dollar. Making matters worse, global economies have cooled, from China to Europe and Canada. But psychology may also be at play. It’s likely that the Trump administration’s rhetoric on immigration and trade wars may be keeping some people away, Chief Economist Lawrence Yun said.
“The decline is such a large magnitude that it can’t be explained purely by economic factors,’’ Yun said. “We will have to wait to see whether this is a new normal with more subdued activity, or is it a one-year situation where things bounce back.’’
The Chinese made up the biggest segment of foreign buyers, even though the $13.4 billion of purchases was down 56 percent from a year earlier, thanks to its weakening economy and government restrictions on outbound investments, according to the survey. China was followed by Canada, India, the United Kingdom, and Mexico.
The top destinations were Florida, which accounted for 20 percent of foreign purchases, followed by California, Texas, Arizona, and New Jersey, the report said. Foreign buying in California fell to 12 percent from 14 percent a year earlier. It was as high as 17 percent in 2013.