Foreign Investment in United States’ Real Estate is Down, Marking an Opportune Time for Local Buyers to Invest
A little-known fact about the housing market is that foreign purchase of residential properties is a substantial force in the market from coast-to-coast. In fact, overseas real estate investments rose as high as $153B between 2011 and 2017; approximately 60% of foreign buyers are recent immigrants, while others purchase homes in the US as investment properties. Thus, foreign purchasers have a significant impact on housing prices vis-à-vis increased demand and deep pockets. Given the resurgence of COVID-19 in the United States, and the fact that we are essentially persona non grata to the rest of the world, that money-well is temporarily drying up.
Less populace cities in the Midwest are unlikely to feel this burden much, as foreign investors don’t typically invest in properties where they are statistically less well received, but major coastal hubs like Los Angeles and New York City will feel the impact more pointedly. Pair that with this administration’s June 22, 2020 order barring immigrants from obtaining certain employment-based visas, and the problem becomes worse.
This should be welcome news for buyers who have been priced out of the market by outside investors with very deep pockets. Moreover, without this factor artificially inflating the prices of homes, the issue of affordability should become less salient; houses become even more affordable when we consider historically low mortgage rates.
It is a safe bet that once COVID-19 becomes less of an issue in the United States, foreign investment will resume, and housing prices will continue on their upward trajectory. As such, buyers who are considering waiting the virus out would be ill-advised to do so; the time to purchase homes is now.
At the Chernov Team we understand that knowledge is power, and knowledge of how international investors impact the buyer-side housing market is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.