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7 essential things to know about foreign homebuyers in 2016

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Foreign buyers and international investors are still buying real estate in US including in Texas.

NAR’s latest survey of international buyers, which the association conducts annually, provided some keen insights into the U.S. housing market and the role that foreign consumers play.

Here were the seven most notable findings from the survey:

1. Falling International Sales Volume – Between April 2015 and March 2016, foreign buyers purchased $102.6 billion of residential property, a 1.3 percent decline from the previous year. At the same time, though, the number of sales to foreign buyers was up, rising 2.8 percent to 214,885, indicating that the falling volume was because of foreign consumers purchasing less expensive homes.

2. Chinese Dominance – For the fourth year in a row, Chinese buyers were the most active in U.S. real estate, spending $27.3 billion in the last year; that was more than triple the $8.9 billion of second-place Canada. Furthermore, Chinese buyers also led the pack in home purchases (29,195) and median price ($542,084), although consistent with the overall market, both volume and purchases were down for Chinese buyers, declining 4.76 and 17.59 percent, respectively.

Other notable buyer countries included India ($6.1 billion, the United Kingdom ($5.5 billion), and Mexico ($4.8 billion), though the UK’s Brexit vote, which we covered in detail, may impact purchases from that country.

3. Exchange-Rate Mayhem – One reason for the less ambitious foreign purchases is that U.S. homes have grown more expensive to foreign consumers, and NAR pinpointed two causes: first, U.S. home prices are up 6 percent year-over-year; and second, most foreign currencies have depreciated against the dollar, which has further added to the cost of U.S. homes (when the dollar appreciates, U.S. goods become more expensive to consumers in other countries). As a result of those trends, U.S. homes are 45 percent more expensive for Venezuelans and 24 percent more expensive for Brazilians, while eight other countries (including China) saw double-digit increases.

4. Broad Price Ranges – Although foreign buyer sales volume was down, the median price of foreign purchases, at $277,380, was still higher than the overall U.S. median of $223,058. Most foreign buyers, NAR found, purchase homes priced between $250,001 and $500,000, with 10 percent paying more than $1 million.

5. Cash is King – Fifty percent of foreign homebuyers paid for their properties with cash, down slightly from 55 percent last year (but still double the U.S. rate). Buyers from Canada, China, and the UK were the most likely to pay with cash.

6. Single-Family Reigns Supreme – The detached single-family home in the suburbs was the main draw to foreign buyers. A majority, NAR reported, purchased suburban homes, and two-thirds or more of buyers from China, India, Mexico, and the UK opted for detached single-family properties; interestingly, Canadian buyers were the most likely to buy multifamily properties.

7. The Realtor Perspective – Thirty-one percent of Realtors worked with international clients in the last year, down from 34 percent in the previous survey but still up from 27 percent in 2014; only 5 percent of Realtors worked with six or more foreign buyers.

In a very intriguing shift, NAR found the share of Realtors helping U.S. buyers find propertyoutside the U.S. more than doubled in the last year, rising from 6 percent in 2015 to 14 percent now; 87 percent of such buyers were looking for either vacation or residential rental properties.

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