Worldwide consumers stepped out of U.S. properties throughout the pandemic, China is speeding again
U.S. homebuyers were on a shopping spree for much of the first year of the coronavirus pandemic. However, international buyers did just the opposite.
Even with virtual property tours options, US property sales to overseas buyers declined 31% from April 2020 to March 2021, according to the National Association of Realtors.
International buyers bought 107,000 properties, the lowest unit volume and the lowest dollar volume since 2011.
“The sharp decline in overseas home purchases in the US last year is no surprise given the pandemic lockdowns and international travel restrictions,” said Lawrence Yun, chief economist at NAR, in a press release. “Still, the US housing market has rallied solidly despite the lack of foreign buyers.”
China, Canada, India, Mexico, and the United Kingdom were the top five countries with the highest volume of US residential real estate sales. However, that dollar volume declined by at least 50% for buyers from China, Canada, and Mexico. The UK was the only country among those five to see a year-over-year increase.
It’s especially important to watch out for Chinese buyers, as China took over leading demand for US real estate early in the last decade, but then declined slightly during the Trump administration. Now Chinese buyers are apparently pushing again.
“The Biden Boost has had a positive impact on demand as the US is now perceived as much more predictable and visas are also much easier to obtain,” said Georg Chmiel, executive chairman of Juwai IQI, a home listing site in China like Zillow in the US “On the other hand, and now that we have been looking at the Covid pandemic for over a year, it has reduced the impact on purchasing decisions as flights to the US are possible.”
Home prices are now about 15% higher than they were before the pandemic, but that could actually be an incentive for international buyers.
“Rising prices create demand because people are afraid of missing out,” said Chmiel.
International buyers still believe the US is a good investment as homes are still quite affordable by global standards. If you look at real estate by square meters, for example, US apartments are much cheaper than apartments in Hong Kong or London.
International buyers and everyone else also feel much more comfortable buying their homes virtually now.
The number of virtual tours has increased dramatically across all real estate platforms, both in the US and abroad. Juwai reports that 5,000 virtual tours are available and are currently in use.
“So if that is an indication of convenience, it has certainly increased because people are now used to doing a lot more shopping online, learning to work from home online, and that has had an impact on that too Real estate market, “said Chmiel.
The top destinations for international buyers haven’t changed much despite the pandemic. Florida topped the list for the 13th straight year, with 21% of all international purchases. California ranks second (16%), followed by Texas (9%) and Arizona (5%), while New Jersey and New York are tied with 4%.
International buyers continue to be driven by high return opportunities and see the US as a safe haven for cash. Recently, Chinese buyers in particular have been buying houses for their children in hopes of taking advantage of higher education opportunities in the United States
“With travel restrictions easing and foreign students returning to US colleges in the coming year, there is likely to be some growth in overseas purchases of US real estate,” Yun said. “However, high property prices and the ongoing shortage of inventory could pose a challenge for buyers.”