Foreign buyers, typically purchased properties that are more expensive than properties purchased by domestic buyers, according to NAR’s recently released 2017 Profile of International Activity in U.S. Residential Real Estate.[1]
Among foreign buyers who purchased property in April 2016–March 2017, the median price was $302,290, which is about 30 percent more than the median[2] purchase of $235,792 for all existing homes sold in the United States in the same period. Using average[3] price as a measure, the average price among foreign buyers is $536,900, or about double the average price among domestic buyers of $277,700.
Among the major foreign buyers, Chinese buyers typically purchased residential properties that were more expensive than properties purchased by other buyers. This can be attributed to the tendency of Chinese buyers to purchase residential properties in central cities and suburban areas with relatively higher property prices such as California, New Jersey, and New York.
Foreign buyers are more likely to pay in cash than domestic buyers.[4] Non-resident foreign buyers are more likely to purchase in cash than resident foreign buyers who are more likely to obtain mortgage financing from U.S. sources. Seventy-two percent of non-resident foreign buyers made an all-cash purchase compared to 35 percent of resident foreign buyers.
Most foreign buyers from Canada and China made an all-cash purchase. Meanwhile, foreign buyers from India, most of whom are resident foreigners buying primary residences, obtained mortgage financing from U.S. sources.
[1] The term international or foreign client refers to two types of clients: Non-resident foreigners (Type A) who are non-U.S. citizens with permanent residences outside the United States, and who typically purchase property as an investment, for vacations, or other visits of less than six months to the United States; Resident foreigners (Type B) who are non-U.S. citizens who are recent immigrants (in the country less than two years at the time of the transaction) or temporary visa holders residing for more than six months in the United States for professional, educational, or other reasons.
[2] The median is the middle value of the distribution. Half of all purchases fall below this value and half are above this value. Because home values tend to skew to the higher end, the median is often a better reflection of typical market activity.
[3] The average or mean price is more sensitive to capturing extreme points, in this case, high-end purchases among foreign buyers.
[4] On average, cash sales were 23 percent of existing home sales during the period April 2016–March 2017, based on NAR’s REALTORS® Confidence Index.
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