In a year characterised by travel restrictions, international real estate investment in the US dropped to its lowest level since 2009. However, Florida soared in the rankings and took the highest percentage of the foreign market share since 2012. Sunshine and buy-to-let investment would appear to be more popular than ever.
The 2022 Profile of International Transactions in U.S. Residential Real Estate, published by the National Association of Realtors (NAR), reveals a subdued market for foreign investment in terms of units sold. Nonetheless, the dollar volume of transactions rose compared to last year, boosted by high-value purchases.
Fewer purchases but higher value
In total, foreigners bought 98,600 units between April last year and March this year. The figure represents the lowest for a decade and just 1.6% of the total market.
However, in terms of dollar value, international real estate investment in the US reached US$59 billion, an 8.5% increase on the previous year. NAR analysts attribute the uptick to the higher value of foreign purchases. Their median stood at US$366,100, compared to US$355,700 for all transactions. In addition, 10% of international buyers spent more than US$1 million on their investment.
The increase also comes despite higher exchange rates. According to the report, US real estate cost 8% more for euro buyers last year and 5.3% more for investors with pound sterling. Chinese buyers, however, were able to take advantage of the 2.6% drop in the dollar against the yuan.
Florida favourite for international real estate investment in the US
Since the NAR began compiling its annual report in 2009, the Sunshine State has taken the lion’s share of investment. 2021-22 was no exception when 24% of foreigners bought in Florida. The percentage is 3% higher than the previous year and its highest since 2012.
Florida real estate appeals above all to Brazilians, Colombians and Canadians. Among Brazilians, the state accounts for 55% of their purchases. The figure rises to 60% among Colombian buyers and stands at 45% for Canadians.
The next state in the rankings is California, whose 11% share of the market, is below half that of Florida. In third place are Texas and Arizona with an 8% and a 7% share, respectively.
Nationalities of real estate investors in the US
The Canadians represent the largest nationality group and account for 11% of the market. Mexican buyers make up the second biggest group with an 8% share. The Chinese (6%) and Indians (5%) overwhelmingly prefer California as their investment destination.
As has been the case for the last few years, European buyers have a negligible share of the market. In 2022, British, French and German accounted for just 2% of the market each.
Reasons to buy
The main reason for international real estate investment in the US is to buy a vacation home and a buy-to-let opportunity. 44% of foreign buyers said these were their main motives behind the purchase.
They also mostly preferred single-family homes. This type of property represented a giant 74% of the total leaving townhouses and apartments with just over a quarter of the share.
(Source: National Association of Realtors)