The amount of money that foreign homebuyers spent on U.S. real estate fell to a three-year low as the strengthening dollar and rising property prices cut into affordability.
Sales to non-resident foreigners in the 12 months through March fell to $44 billion from $54 billion a year earlier, according to a survey released Wednesday by the National Association of Realtors. It was the lowest total for foreign buying since the year ended March 2013, when $35 billion was spent. While Canada was the No. 1 source of non-resident foreign homebuyers, China led for the fourth year in a row when recent immigrants are included in the tally.
U.S. luxury markets from Miami to Los Angeles and Phoenix are losing a key source of demand as the strong dollar discourages purchases by Latin Americans, Europeans, Canadians and Asians whose home currencies have declined against the U.S. dollar.
“Weaker economic growth throughout the world, devalued foreign currencies and financial market turbulence combined to present significant challenges for foreign buyers over the past year,” Lawrence Yun, the association’s chief economist, said in a statement.
Half of foreign-buyer purchases, including those by recent immigrants, took place in five states: Florida, with 22 percent of transactions, followed by California, Texas, Arizona and New York, according to the Realtors group.
Latin Americans, Europeans and Canadians tended to favor the warmer climates of Florida and Arizona, while California and New York drew the most Asian buyers. Texas was popular with Latin American, Caribbean and Asian buyers, the association said.
About 73 percent of non-resident foreign buyers made their purchases completely with cash.