For the first time in three years, activity from overseas real estate buyers has increased. During a time when the housing market is under incredible scrutiny and seeing astonishing prices, investors from China are gobbling up available homes.
The National Association of Realtors (NAR) reported that international buyers combined to purchase $59 billion worth of U.S. residential properties between April 2021 and March 2022, up 8.5% from the same period one year earlier. Chinese Investors accounted for $6.1 billion dollars in home purchases, totaling over 10% of the market.
Related: Jeff Bezos-Backed Arrived Homes Released Its Largest Batch Of Single-Family Rental Offerings To Date
The homes being secured by foreign investors aren’t cheap, with average purchase prices hovering near $600,000 per home and median purchase prices approaching $370,000 — the highest ever recorded by NAR. Chinese investors had the highest average purchase price at just over $1 million per home.
Location tells a story as well. Chinese investors purchased nearly a third (31%) of their homes in California. This is a slight disparity from international buyers as a whole, who found the following states the most attractive (in order): Florida, California, Texas, Arizona, New York and North Carolina.
NAR Chief Economist Lawrence Yun said he doesn’t see things slowing down.
“Due to rising interest rates, overall home sales will decline in the U.S. this year,” Yun said. “Foreign buyers, however, are likely to step up purchases, as those making all-cash offers will be immune from changes in interest rates.
“In addition, international flights have increased in recent months with the lifting of pandemic-related travel restrictions.”
American’s have suffered from work stoppages and alterations since the pandemic started and are in the midst of a recession that Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk has called ”inevitable”. Foreign Investors and even home based companies have made headlines in the past year for purchasing homes at what some would call an alarming rate.
So how do you avoid getting left behind if you can’t afford a second home but believe there is opportunity in the real estate market?
Consider investing in real estate investment trusts (REITs) and crowdsourcing platforms that allow you to purchase fractions of homes, or even large-scale commercial developments.
Looking for ways to boost your returns? Check out Benzinga's coverage on Alternative Real Estate Investments:
Or browse current investment options based on your criteria with Benzinga’s Offering Screener.
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