US sees surge in Canadians buying property in Florida
The number of foreign buyers in the United States residential property market surged last year with Canadians in particular snapping up properties in Florida, with California and Texas also popular states.
Overall the volume of sales to overseas buyers increased by 49% to a record $153 billion in 2016, according to the latest figures from the National Association of Realtors (NAR).
Some 284,455 properties were bought by foreign buyers, up 32% from 2016 and purchases accounted for 10% of the dollar volume of existing home sales, up from 8% in 2016.
‘The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of US property over the past year,’ said Lawrence Yun, NAR chief economist.
‘While the strengthening of the US dollar in relation to other currencies and steadfast home price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the US is a safe and secure place to live, work and invest,’ he added.
Although China maintained its top position in sales dollar volume for the fourth straight year, the significant rise in foreign investment in the survey came from a massive hike in activity from Canadian buyers.
After dipping in the 2016 survey to $8.9 billion in sales from $11.2 billion in 2015, transactions from Canadians this year totalled $19 billion, a new high for Canada.
Yun attributes this notable rise in activity to Canadians opting to buy property in US markets that are expensive but still more affordable than in their native land. While much of the US continues to see fast price growth, home price gains in many cities in Canada have been steeper, especially in Vancouver and Toronto.
‘Inventory shortages continue to drive up US home values, but prices in five countries, including Canada, experienced even quicker appreciation. Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the US and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future,’ Yun explained.
Foreign buyers typically paid $302,290, which was a 9% increase from the median sales price in the 2016 survey at $277,380, and above the sales price of all existing homes sold during the same period at $235,792. Approximately10% of foreign buyers paid over $1 million, and 44% of sales were all-cash, down from 50% in 2016.
Buyers from China exceeded all countries by dollar volume of sales at $31.7 billion, which was up from last year’s $27.3 billion and the $28.6 billion recorded in 2015, as the new survey high. Chinese buyers also purchased the most housing units for the third consecutive year at 40,572, up from 29,195 in 2016.
After Canada at $19 billion, the next biggest group of buyers were from the UK at $9.5 billion, Mexico $9.3 billion and India $7.8 billion, with all these nations buying more than they did a year ago.
This year’s survey once again revealed that foreign buying activity is mostly confined to three states with 22% in Florida, 12% in California and 12% in Texas. New Jersey and Arizona saw 4% each of foreign investment. Florida was the most popular state for Canadian buyers, Chinese buyers mostly chose California, and Texas was the preferred state for Mexican buyers.
The research also shows that upswing in foreign investment came from both recent immigrants and non-resident foreign buyers, as each increased substantially to new highs. Sales to foreigners residing in the US reached $78.1 billion, up 32% from 2016, and non-resident foreign sales up to $74.9 billion, a rise of 72% from 2016.
‘Although non-resident foreign purchases climbed over the past year, it appears much of the activity occurred during the second half of 2016. Realtors in some markets are reporting that the effect of tighter regulations on capital outflows in China and weaker currencies in Canada and the UK have somewhat cooled non-resident foreign buyer interest in early 2017,’ Yun pointed out.
Looking ahead, Yun believes the gradually expanding US and global economies should keep foreign buyer demand at a robust level. However, it remains to be seen if both the shortage of homes for sale and economic and political headwinds end up curbing sales activity to foreigners.
‘Stricter foreign government regulations and the current uncertainty on policy surrounding US immigration and international trade policy could very well lead to a slowdown in foreign investment,’ he added.