Residential property sales and prices in the United States will be driven by changing demographics due to immigration and a growing interest from foreign buyers, according to experts.
Overall the market is becoming increasingly international, but not just with interest from overseas buyers, as a growing number of immigrant households is transforming what the market needs to provide.
Experts speaking at a forum organised by the Richard J. Rosenthal Centre for Real Estate Studies, explained that immigration affects rents and home prices far more than it affects the labour market.
An expected 1% increase in a city’s population produces a 1% uptick in rents while an unexpected influx can increase rents by 3.7%%, according to Alex Nowrastech, an immigration policy analyst at the Cato Institute.
He explained that studies conducted on immigration and housing show that the effects of immigration on real estate are localised, with most of the impact felt where immigrants tend to reside which is predominately low to middle income counties.
‘Each immigrant adds 11.6 cents to housing value within that county. In 2012 some 40 million immigrants added roughly $3.7 trillion to US housing wealth,’ he said.
He gave examples of how immigration movements can affect housing, including the Legal Arizona Workers Act in 2008 when the resulting population decline exasperated a drop in home prices the state experienced during the downturn.
‘Fewer households purchasing or renting property subsequently lead to higher vacancies and lower prices. Immigration is the best way to increase population, housing supply and prices,’ he added.
Danielle Hale, managing director of housing research at the National Association of Realtors (NAR), said that foreigners increasingly view the US as a great place to buy and invest in real estate.
She pointed out that NAR research shows that there has been an upward trend in sales activity from resident and non-resident foreign buyers in the past seven years, with total foreign buyer transactions increasing from $65.9 billion in 2010 to $102.6 billion.
‘A majority of foreign buyers in recent years are coming from China, which surpassed Canada as the top country by dollar volume of sales in 2013 and total sales 2015. Foreign buyers on average purchase more expensive homes than US residents and are more likely to pay in cash,’ she added.
She also explained that in NAR’s latest survey 22% of all foreign buyers purchased property in Florida, 25% in California, 10% in Texas and 4% in Arizona and New York.
Latin Americans, Europeans and Canadians, who tend to buy for vacation purposes in warm climates, mostly sought properties in Florida and Arizona. Asian buyers were most attracted to California and New York, while Texas mostly saw sales activity from Latin American, Caribbean and Asian buyers.
