The U.S. housing market has seen a significant drop in the number of foreign buyers purchasing homes in the past year. According to the National Association of Realtors, 14% fewer foreign buyers have purchased homes in the U.S. since last year. And this is the lowest number in a decade.
However, the median price of the homes purchased by foreign buyers is at an all-time high of $396,400. This begs the question: why are foreign buyers leaving the U.S. housing market? Now, let’s go ahead and explore the reasons behind this trend.
Rising Home Prices
The median price of homes purchased by foreign buyers has reached a new height, which means that they are having to pay more for homes than they did in previous years. American real estate markets have become increasingly expensive. Thus, making it difficult for foreigners to purchase a home without a high budget.
This trend is not limited to just foreign buyers. But it is affecting most Americans as well. The high cost of living is causing many Americans to search for affordable housing elsewhere and avoid the purchase of homes.
Stronger U.S. Dollar
The strong U.S. dollar is another factor that is discouraging foreign buyers from investing in U.S. real estate. Many countries have weaker currencies than the U.S. dollar, which means that buying property in the U.S. is becoming more expensive than buying in their home countries.
Additionally, a strong dollar may hinder international buyers from converting funds into U.S. dollars quickly and at a fair rate.
Political Uncertainty
Next up: Political uncertainty is one of the most significant challenges that foreign buyers face when buying property in the U.S. The current political climate, immigration policies, and other political factors can create hesitation for international buyers.
These political uncertainties include higher tariffs and changes in immigration policies. In turn, these create a barrier for people who are interested in moving to the United States. They may doubt if it is safe and worth the investment given the uncertainties.
Complexity of the U.S. Market
The U.S. real estate market can be challenging for international buyers due to its complexity. Foreign buyers may have a hard time navigating U.S. tax rules, mortgage terms, and wetware that they’re not familiar with.
They may also not know the process of finding a realtor or lender that they can trust. Something that can create additional stress for them. Navigating these complexities requires assistance from experts, but it can come at an additional cost.
Economic Conditions in Their Home Country
Lastly, economic conditions in a foreign buyer’s country of origin also play a role in their decision to invest in U.S. real estate. If their country’s economy is not doing well, it may not make sense for them to invest in the U.S. market. Plus, investments made in times of turmoil can be risky.
These buyers may fear losing their invested money, especially if their country’s economy is not stable.