International Buyers of U.S. Real Estate: Key Highlights for 2023

International Buyers of U.S. Real Estate- Key Highlights for 2023
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The ever-changing global real estate investment scene has seen the United States consistently maintain its appeal for international buyers. The year 2023 has been marked by significant shifts and trends in the international real estate market, with foreign buyers still playing a crucial role.

Key Figures (April 2022-March 2023):

  • Foreign buyers purchased $53.3 billion worth of property
  • 84,600 existing homes were bought by foreign buyers
  • The average foreign buyer purchase price increased to $639,900
  • China was the leading foreign buyer
  • Florida was the top destination

Part I: High U.S. Housing Demand, Limited Supply, and Rising Home Prices

The U.S. housing market has its unique dynamics. In 2021, it saw the highest levels of home sales since 2006. However, 2022 experienced a market slowdown and normalization due to various factors. Mortgage rates were increased in response to inflation, affecting housing demand.

As of March 2023’s end, the housing market experienced supply-related challenges. Unsold homes were 4% higher than the levels a year ago. The median price of existing homes also reached a significant milestone, hitting $375,700 in April 2023.

Part II: International Buyers

Purchases of Existing Homes

The statistics for 2023 show a shift in the international buyer scene. The number of existing homes bought by foreign buyers fell to 84,600, the lowest since 2009. This drop represents a 14% decrease from the previous year, with 14,000 fewer foreign buyers in the market.

The dollar volume of purchases made by foreign buyers also fell by 9.6% to $53.3 billion, reflecting market dynamics.

Origin and Destination

The international buyers’ origin continues to diversify. Asian buyers remain dominant, accounting for the largest group with a 38% market share. Latin American buyers are next in line, making up 31% of the market. European and Canadian buyers constitute 14% and 10% of the market share, respectively.

China continues to be the leading source of international buyers, accounting for 13% of the market. Chinese buyers are notable for the highest average purchase price at $1.2 million, often investing in expensive states like California and New York. Conversely, Mexican buyers tend to buy less pricey properties, with Texas being a preferred destination.

Top 10 countries of origin of international buyers include:

China, Mexico, Canada, India, Colombia, United Kingdom, Australia, Germany, Venezuela, and Israel. As for the U.S. destinations, Florida is the top choice for international buyers, with a substantial 23% market share. California and Texas follow closely, each with a 12% share.

Top 10 states for international buyers are:

Florida, California, Texas, North Carolina, Arizona, Illinois, New York, Ohio, Pennsylvania, and New Jersey.

Foreign buyers continue to favor all-cash purchases, with 42% opting for this payment method, compared to 26% among all existing home buyers. Foreign buyers living overseas are more likely to make all-cash purchases.

Real Estate as an Investment

Foreign purchases of U.S. real estate saw a 6% increase from the previous year, indicating a growing interest in real estate investment for various purposes.

Most foreign buyers prefer detached single-family homes, with 76% making such purchases. Moreover, foreign buyers tend to favor suburban areas, with 45% choosing this type of location. Notably, over three-quarters of Asian Indian buyers prefer suburban properties. In contrast, Canadian buyers often buy properties in resort areas for use as vacation homes.

Part III: Misinterpretations about Buying U.S. Property

Despite the appeal of U.S. real estate, some international clients mention their perceived obstacles to investing in this sector.

Here are the common misunderstandings, the actual facts, and our solutions:

  • Property costs: Not really. Refer to the chart comparing prices to global cities.
  • Challenges in finding suitable properties: This can be a problem with time zones, which sites to browse, etc. We have resolved this – AM Property Finder.
  • Immigration Laws: There are NO restrictions for foreign real estate investors!
  • Difficulties in obtaining financing: This is our expertise. Check our Foreign National loan programs.
  • Property taxes: Income attracts taxes; however, numerous ways can be used to deduct expenses and maximize your rental income.
  • Exposure to U.S. tax laws: U.S. taxes are MUCH SIMPLER than perceived. States like Texas, which don’t have state taxes, are popular investment destinations. Also, many ways can be used to deduct expenses and maximize your rental income.
  • Maintenance fees: Any real estate investment will require maintenance, but that’s why a small fee is paid to the property manager. AM Concierge service can introduce you to our preferred managers to make your investment smooth and hassle-free.
  • Currency transfer difficulties: No issues here. AM Concierge service has partnered with remittance firms to assist our clients. Even in China, we have viable solutions from our partners.
  • Insurance: Insurance is a small fraction of the rental income you receive, and we have partners to assist you.
  • Exchange rate worries: If you are making the mortgage payments in your home currency, you might incur a currency loss BUT you can easily hedge this PLUS you will be earning USD rental income

Report: USA Real Estate – Key Highlights for 2023

* This article shared the data and critical elements influencing the international buyers of U.S. real estate in 2023 report above.

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