The United States has always been a hot spot for international home buyers for many reasons. However, in the past year, foreign buyers have purchased 14% fewer homes in the U.S. market. This has been the least since the National Association of Realtors began tracking the statistic in 2009.
In this blog post, we will examine the reasons behind this decline in the number of international home buyers in the U.S. market.
Weakening Dollar
The value of the dollar has been fluctuating significantly over the years, which has affected many international homebuyers. A weakening dollar has made buying a home in the U.S. significantly more expensive for those buying from a country with a stronger currency.
For example, the Chinese yuan has increased in value by nearly 20% over the last two years. This means that a Chinese investor would get less for their money than they would have two years ago.
Tightening of Policies
The U.S. government has tightened its policies and regulations on foreign investments. Something that could be another reason why international homebuyers are pulling out of the market. The Foreign Investment in Real Property Tax Act (FIRPTA) was enacted to shift the tax burden from the foreign buyer to the U.S. seller.
Thus, the increased cost and regulations have made it more challenging and time-consuming for foreign buyers to invest in the U.S. real estate market.
Immigration Policies
The U.S. immigration policies and travel restrictions have made it increasingly difficult for foreign buyers to move to America. Since international buyers can only stay in the U.S. for a limited time, the restrictions may prevent them from getting a return on their investment quickly.
As a result, this has made it much easier and more attractive for foreign buyers to invest in other countries without the same restrictions they would face in the U.S.
Lack of Inventory
The success of the U.S. housing market has led to a decrease in the inventory of homes for sale, which has resulted in a seller’s market. A lack of affordable listings has discouraged international buyers, who are usually looking for a good deal. As a result, they sought out more affordable alternatives to purchasing homes in the U.S. market.
Parting Thoughts
The reasons why there has been a decline in the number of international home buyers purchasing homes in the U.S. is clearly due to several reasons. Some of the leading reasons include a weakening dollar, stricter policies, unfavorable immigration policies, and an increase in the median price of homes purchased.
Therefore, it is essential for real estate professionals to work with the U.S. government to fully understand the current policies and evolving market trends to make selling real estate in the U.S. attractive and beneficial for both local and international buyers.
Moving forward, it is crucial to adapt or develop new advertising and marketing strategies that entice foreign investors and provide them with exceptional property options, services, and overall experiences that keep them coming back to the U.S. market.