Domestic purchases of American property fell for the sixth year in a row and to the lowest level since records began in 2009.
According to a report released Tuesday by the National Association of Realtors (NAR), in the year ending in March, foreigners bought 84,600 homes in the United States, down 14 percent from the previous year.
In terms of cost, domestic buyers purchased $53.3 billion of U.S. homes during the period, down 9.6 percent from the previous year and the lowest since NAR began tracking the data in 2011.
Domestic buyers are advancing for many of the same reasons as Americans, such as home prices near record highs and a limited number of properties for sale. In addition, the strength of the US dollar has also discouraged many locals.
Lawrence Yun, NAR’s chief economist, said that in the 2020-2021 period, home prices in the United States fell sharply, and many people were priced out of shopping malls, “after the COVID-19 pandemic, I thought domestic buyers would come back… But the strong dollar doesn’t help.”
In the early days of the COVID-19 pandemic, overseas demand for U.S. real estate malls weakened significantly as the country opened its borders to domestic tourism. As America faded, the real estate market began to take off. But a weaker dollar makes homes more expensive for domestic buyers.
Still, the drop in the quality of domestic purchases was less than the 23 percent drop in existing home sales in the United States over the same period. That’s because domestic buyers are more likely to be able to pay in cash than domestic buyers, making them less likely to react to a fall in the interest rate on prime deposits.
According to NAR, about 42 percent of Americans paid in cash, compared with a quarter of all buyers in the same period.
Locals also have more money to spend. In the past year ending in March, the median purchase price of a home buyer was about $396,000, while all previously owned homes sold for about $384,000 during the same period, the NAR said.
Real estate agents said that after the limited pace of the epidemic, the domestic people re-reflected no interest. Chinese buyers were the most subdued during the period, with purchases totaling $13.6 billion, the country’s highest level since 2018.
But foreigners make up only a small part of the overall American real estate market. In the year ending March, purchases by foreigners accounted for less than 2% of existing home sales. And their purchases tend to spread only to a few economically advanced states, such as Florida, California and Texas.
Florida was the most popular destination for domestic buyers, accounting for nearly a quarter of all homes sold during the same period. Just under half of Canadian buyers and four-fifths of Colombian buyers chose to buy in the Sunshine State.
Over the past five years, Texas and Florida have both taken a larger share of the domestic market. But Florida passed an enforcement law earlier this year that allows residents of seven countries, including China (not including green card holders), to buy property in the state.
Although California’s share has fallen slightly since 2018, it remains the most popular destination for Chinese buyers, including Hong Kong and Taiwan. Overall, Chinese buyers accounted for about 13 per cent of all domestic buyers, more than double their share a year ago. It was followed by Mexico and Canada with 11% and 10%, respectively. India accounts for 7%.
According to Chen, nonresidents account for 56 percent of all capital spent by native Americans on U.S. real estate. Half of domestic buyers bought properties for vacation purposes or did not rent property, or both.