Who Is The Top Buyer of U.S Real Estate?
For some potential home buyers in Canada, there was a significant phase of Canadians buying U.S real estate either as investment properties or for their vacation home. If you’ve ever been through a winter in Canada, you would understand why Canadians opt to skip the long-drawn-out winters and chilly temperatures for a sunny destination. Home buyers often attend so many seminars, advertisements, and recommendations to purchase a property in areas such as Arizona, California, and Florida. This boost of interest came after the market crash in the United States more than ten years ago.
Many Canadians took advantage of this opportunity and didn’t purchase properties located in the United States, becoming the largest foreign real estate investors in the U.S. This trend lasted for many years until things changed in 2016.Chinese investors have knocked off Canadian investors to now become the leading foreign real estate investors in the United States. Click To Tweet
Few different reasons have contributed to the fact that Chinese investors have overtaken Canadian investors and the U.S real estate market. One of the leading effects was due to the exchange rate between Canada and the United States. Despite the uncertainty of the U.S elections, selecting Donald Trump as the new president, the U.S dollar has been able to gain strength, especially against the Canadian dollar.
With the Canadian dollar becoming weaker against the U.S, it became more expensive for Canadians to purchase properties or maintain their properties in the United States. The strength of the U.S dollar compared to the Canadian dollar was not all bad news for Canadians. Many Canadians have also decided to sell the properties that they had invested to reap the benefits of a stronger U.S dollar, getting more money from their investments.
Residential properties were not the only properties that Chinese investors were interested in. There has been a spike in commercial property purchases throughout North America from Chinese investors as well. The prominent North American cities that saw the most significant commercial investments include Los Angeles, New York, San Francisco, Seattle, Toronto, Montreal, and Vancouver. In fact, when it comes to Canada, real estate investments in Toronto and Montreal have officially surpassed Vancouver real estate investments.
In fact, Chinese investors purchased close to 280 500,000 of residential properties in 2017, throughout the United States, which was a 33.33% increase from the year before. Despite the purchase of homes only increasing by 1/3, the volume of transactions increased by 50%, according to the Los Angeles Times.China is expected to invest more than one trillion dollars over the next ten years in real estate property around the world. Click To Tweet
Their top four countries for real estate investment includes the United States, Australia, Hong Kong, and Canada. This consists of a mixture of both commercial and residential real estate investments.According to Forbes Magazine, the United States is still the top country for global investors to purchase real estate. Click To Tweet
In fact, close to 10% of all residential homes purchased in the United States was done so by foreign investors. This comes as a contrast to the previous popular belief that Brexit would drive more real estate investment into London.
However,According to the association of foreign investors in real estate, one of the leading contributors to keeping the United States as a top attraction for foreign investors was the security for the safety in their investment as well as the… Click To Tweet
Despite a significant appreciation in the value of homes over the years, the real estate in the United States has yet to fully recover from the housing market turmoil from a decade ago. This has continued to make the prices for real estate attractive to foreign investors as it is considered less expensive to real estate auctions in other countries.
According to UpNest the top five countries that are purchasing us real estate include,
China- 31.7 billion worth of Investments
Canada- 19 billion worth of Investments
The United Kingdom 9.5 billion worth of Investments
Mexico- 9.3 billion worth of Investments
India- 7.8 billion worth of Investments [Click to tweet]
It should come as no surprise that China is in the lead for purchasing U.S real estate, accounting for around 20% of foreign purchases.
To dig a little deeper, the top five states that foreign investors have been purchasing real estate in include:
- New Jersey
THE BOTTOM LINE
We can continue to see an increase in foreign investments within the United States real estate industry; the United States still maintains its ground on being a desirable option for international investors, evident by the surge in foreign purchases over the past few years.This trend is not only expected in bigger cities but also a spread of wealth to smaller towns throughout the United States as well. The contribution of security for investors will continue to propel foreign investors to maintain their investments throughout the United States.