Purchases of U.S. homes by foreigners has dropped by 50% over the last two years, according to the Wall Street Journal. The figures come as a blow to top end real estate markets in places like Miami and New York.
Less than $78 billion in U.S. residential real estate was purchased in the year ended March 2019, which marks a 36% decline from the $121 billion in the previous 12 month period.
The pullback is resulting in price cuts in many coastal cities and causing new condos to sit empty. America has been a less hospitable place for foreigners to buy real estate due to a slowing global economy, the country’s trade dispute with China and President Trump’s immigration stance.
Purchases by foreigners are now at their lowest level since 2013, which was about the same time buyers from China and South America started to enter the U.S. market, seeking a place to store their capital.
Lawrence Yun, the Realtors’ chief economist said:
“It’s quite striking in terms of the magnitude of the decline.”
Real estate agents say that they can feel the pain from the pull back when trying to sell higher-end real estate in places like Miami and New York.
Martin Eiden, a real-estate agent at Compass said:
“Generally speaking, we are in the largest market correction since the Great Recession in New York City. The foreign buyers have pretty much all but disappeared. I’m helping a lot of foreign buyers get their money out of this country as fast as possible.”
Eiden said you can feel the impact at ultra luxury residences like Manhattan’s 75 story “billionaire building”, One57. However, the effects even ripple to lower end purchases like $800,000 one bedroom apartments that parents were once buying for children attending New York University. Those sales have dried up.
Nonresident foreign buyers and immigrants both cut back on US home purchases and the largest drop was in buyers from China, who purchased over $13 billion of US homes during the year prior to March. This marked a 56% decline from the prior 12 months. Chinese buyers had been specifically most active in California.
Ron Shuffield, president of Berkshire Hathaway HomeServices EWM Realty in south Florida said: “Our foreign buyers have been really driving the luxury market for several decades. Those buyers for various reasons have slowed down their purchasing. In many cases, the currency exchange rates are still so unfavorable, they don’t have the buying power they used to have.”
Jason Haber, a broker at Warburg Realty Partnership, said: “When you see something that’s been on the market for two or three years, you’re not in a rush to buy it.”