By Susanne Dwyer
Foreign investments in U.S. real estate have surged nearly 50 percent as of late, according to the 2017 Profile of International Activity in U.S. Residential Real Estate from the National Association of REALTORS® (NAR).
The report shows that between April 2016 and March 2017, foreign buyers and recent immigrants purchased over $150 billion in residential property—$153 billion, to be exact. Marking a new survey high, this boost is a 49 percent increase from last year’s $102.6 billion rank.
“In the face of global economic and political uncertainty—that is, Venezuela upheaval, Brexit, Syrian refugees, Russia meddling, and even the very nasty U.S. Presidential election campaigning—people with money were searching for something very safe,” says Lawrence Yun, NAR chief economist and senior vice president of Research. “As a consequence, both the demand for U.S. Treasury bonds and U.S. real estate rose.”
While the report shows an influx of buyers from the top five countries, an increase in sales dollar volume from Canadian buyers seems to be the largest driving factor behind the boom. Canadian transactions increased from last year’s $8.9 billion to a whopping $19 billion, a new high for Canada.
But Canadians are far from the only foreign buyers currently slaying the U.S. real estate game. Despite the rising Canadian numbers, China still reigns as the top country for sales dollar volume for the fourth consecutive year.
“Canadians bought vacation homes in warm weather states, driven largely by the huge housing wealth accumulation in Canadian markets like Toronto and Vancouver,” says Yun. “Chinese bought partly because its economy continued to grow at 6 percent or better. Such a growth rate, though light by recent Chinese standards, is enough to crank out a new billionaire every week. Then consider how many millionaires are being created in China.”
While the three states with the highest foreign activity are Florida, California and Texas, other cities are seeing a rise in foreign traffic, too.
In Seattle, Chinese buyers are flocking to the real estate market, drawn by the burgeoning tech scene. “Seattle is one of the hottest markets in the country right now due to new job creation in the tech industry,” says Mark Kitabayashi, managing broker with TeamMark Windermere Real Estate. “That given, our prices are still reasonable when compared to a lot of the larger cities.” Prices in the heart of the city land around $800,000, but out in the suburbs, you can still score a property for closer to $300,000 – $350,000—a reasonable investment for both foreign and domestic buyers. In fact, the median price in Seattle’s suburbs is comparable to the median price paid by foreign investors throughout the country, which came in at $302,290—an increase of 9 percent from last year’s $277,380.
Another reason foreign investors are flocking to Seattle? The market’s relationship with neighboring Vancouver, B.C. “When B.C. added an additional 10 percent tax, that flocked a crowd here,” says Kitabayashi. Politics factor in, too. “When Trump became president, foreign investors started heading back to B.C. Now it’s evening out,” notes Kitabayashi.
Taxes may also bring
From:: Finance and Economy
