Foreign buyers in the U.S. have dropped by half in 2019 compared to the previous two years. Only in 2019 compared to 2018 there was a decrease of -36% in residential real estate, foreigners only spent $78 billion in 2019 compared to $121 billion in 2018.
Fewer foreigners buying residential homes in the US has pushed a decrease in listing prices. With lots of inventory and no buyers to fill them up, the market has switched from a seller to a buyer’s market. It is shocking the magnitudes of the drop as we have reached the lowest level of foreign residential investment since 2013.
Many reasons are causing this drastic decrease in foreign buyers. There is a slowdown in the global economy, caused by the trade dispute between China and the United States, and with the anti-immigration restrictive law, the market is less and less attractive for foreign buyers to invest over the past few years. Not to talk about economic and political instability in some Latin American countries such as Venezuela, Brazil, or Mexico.
China buyers represent the largest drop of international buyers with a -56% (only $13 M investment) decrease this year compared to the same period in 2018. The only state benefiting from the decrease of foreign buyers is California since in this state there’s usually a scarcity of houses for sale. It is not the case of Miami, as there is an excess of luxury condo awaiting foreign buyers.
It is a tangible danger to the real estate market, even more for the ultra-luxury industry. Those foreign owners who have already an investment in the US are trying to run from the county and get rid of their properties.
Despite the cooled-down market for foreign buyers, Miami remains the number one city in the US for cash deals. Even though there has been a deceleration, there will always be foreign buyers in Miami, looking for tax benefits and financing advantages.
* The studied period is until March 2019.