Overseas Buyers of US Real Estate

The past several years have been volatile for all areas of the U.S. economy, but especially the real estate market, which as seen price appreciation from a low-interest rate environment. Anyone who has tried to purchase a new home in the U.S. during this time has learned what it means to be a buyer in a seller’s market, but it wasn’t as bad as it could have been.

As a result of pandemic-related travel restrictions, the true scope of potential foreign buyers into U.S. real estate was not felt. That meant less competition from wealthy, overseas cash buyers.

However, that’s beginning to change as overseas buyers of US real estate return.

According to a report by the National Association of Realtors (NAR), Non-U.S. citizens comprised $59 billion worth of home purchases in the United States from March 2021 to March 2022, a 9% increase from the previous year and the first increase in three years. 44% of these foreign buyers paid cash and the average price of homes purchased has increased by 18%, nearing $600,000.

All of this comes in the wake of a real estate environment characterized by low mortgage rates that created bidding wars, housing shortages, and price surges across the country. However, the madness may wane as interest rates rise, and an uncertain economy could sideline many potential domestic buyers.

This is good news for foreign buyers making all-cash offers because they are effectively immune from interest rate changes. As pandemic-related travel opens up, more and more foreign buyers can enter the U.S. real estate market.

Who is a foreign buyer? or overseas buyers of US real estate?

According to the NAR, a “foreign buyer” is a non-US citizen with a permanent address in another country. Moreover, 57% of these foreign buyers are non-U.S. citizens and recent immigrants who have been living stateside for less than two years or non-immigrant visa holders who have resided in the U.S. for at least six months.

Where do most foreign buyers come from?

From March 2021 to March 2022, foreign buyers living abroad spent $24.9 billion on purchasing homes in the United States, an increase of 13.2%.

Canadians have the highest share of existing home sales at 11%, followed by Mexicans (8%), Chinese (6%), Indians (5%), Brazilians (3%), and Colombians (3%).

While Chinese buyers purchased fewer homes than Canadians, the dollar value of their purchases was substantially higher, with $5.5 billion coming from Canada vs $6.1 billion from China.

Which states are they going to?

For the 14th year running, the leading location for foreign buyers was Florida, with 45% of international purchases occurring in the Sunshine State. After Florida were California (11%), Texas (8%), Arizona (7%), New York (4%), and North Carolina (4%).

As domestic buyers are on hold due to an unpredictable economy and rising interest rates, the opportunity for foreign buyers to capture great deals will also increase. If you’re considering purchasing a house in the U.S., you may want to get in early before the rest of the world scrambles to get in on the action.

Whether you want to buy/rent a residential home or invest in U.S. real estate, it is in your best interest to connect with real estate experts committed to seeing your housing dreams come true.

At America Mortgages, we leveraged decades of experience in mortgage lending to match you with our pool of lenders. Our only focus is providing market rate U.S. mortgage financing for foreign nationals and U.S. expats. No one does it better!

Contact us today at [email protected] to find your dream home or learn why you should invest in U.S. real estate market now.

Hedging Inflation With Real Estate

While rising inflation and increased U.S. interest rates can cause stress for many, investing in real estate can be the best approach to hedging inflation. With inflation at a nearly 40-year high and the uncertainty in the stock market, investing in real estate is decidedly one of the best approaches to hedge inflation due to the market’s lack of correlation to the volatility of stocks, bonds, and the consistent returns the investment provides.

What does it mean to hedge against inflation?

Hedging is essential to foreign national and U.S. expat investors looking to have a diversified portfolio as it provides some form of protection against losses due to the volatility of markets and inflation. An inflation hedge is an investment that attempts to offset a currency’s value or purchasing power loss. This typically means investing in a ‘real’ asset, like real estate, with a ‘real’ return, which would be your rental yield.

Real estate has an intrinsic value that can provide monthly returns, which is essential in periods of rising inflation. Therefore, as an investor, putting your money into property investment can keep you ahead of inflation and minimize losses.

Investing in real estate is your best option.

Real estate is an excellent hedge against inflation as there is intrinsic value in the property, rental yields provide consistent cash dividends, and it is less affected by the economic climate and inflation. As inflation rises, there will always be a high demand for homes, which means rental prices and yield would also increase.

The increase in demand for rental properties and low vacancy rates allow investors to increase their rent and stay ahead of inflation. Investors looking to purchase rental properties can capitalize on the increase in demand for rent and the increase in rental prices as you have pricing power, therefore maximizing your rental yield and returns.

Rents and property values are typically correlated with rising consumer prices, so in a period of high demand and limited supply that we currently are experiencing, real estate has shown to be a wise and profitable investment.

What about increasing mortgage and interest rates?

The rise in interest rates has shown to be beneficial to rental property owners as fewer people are looking to purchase homes and would rather rent, causing the rental demand to skyrocket, leaving real estate investors in the perfect position.

Additionally, even though mortgage rates have gone up recently, they are still historically low; this means if you are a non-resident or U.S. expat investor, now is the time to capitalize on the opportunity and invest in real estate.

With the low supply of properties and the threat of increasing mortgage rates, now is the perfect time to jump on the opportunity and purchase investment properties to add to your portfolio as the rising interest rates make it more expensive to borrow money and push people to rent rather than take out a mortgage and purchase their own property.

If you have been toying with investing in real estate, the current economic climate shows that now is the perfect time to do so. As a company, America Mortgages’ only focus is providing U.S. mortgage financing for foreign nationals and U.S. expats. 100% of our clients live and work abroad, making us the leading expert in this space. Now is the time to make hay while the sun shines.

If you’re considering purchasing or cashing out of U.S. real estate, we’d love to hear from you. [email protected].