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It is no secret that foreign buying activity in American real estate has been vigorous in recent years, with billions of foreign dollars rushing into the market. The diversification and protection of wealth is a major factor in these purchases, driven by calculated investment decisions and often coerced by unpredictable economies overseas. The National Association of Realtors (NAR) reports that between April 2015 and March 2016, foreign buyers spent $102.6 billion on residential properties in the U.S. Despite this gargantuan figure, it is amazingly 1.3 percent lower in dollar volume from the previous year.
However, and this is the part that is especially meaningful to the average American, the amount of properties purchased actually rose 2.8 percent to 214,885. “The slight drop in dollar volume can probably be accounted for based on the types of properties purchased, and the locations of many of those properties. We’ve seen at least some evidence that foreign buyers—both investors and people just looking for a home—have begun looking beyond expensive markets like San Francisco, New York City and Washington D.C., and buying properties in smaller, less-expensive cities in the Southeast and Midwest,” affirmed Rick Sharga, executive vice president at Ten-X, an online real estate marketplace.
Foreign buying activity, like all buying activity, elevates competition, prices, and diminishes inventory. In buzzing markets such as San Francisco and New York, these difficult circumstances are expected to a certain extent. What is troubling is the effect this foreign purchasing power is having on smaller cities. With high prices and low inventory, the American housing market is already daunting enough to the average American. As even calm markets begin to decrease in affordability and availability, what are prospective homebuyers to do?
With the effects of globalization and the looming consequences of Brexit, the future is unclear for U.S. housing. What do you need to do to protect yourself as a business owner, homeowner and homebuyer? The 3rd Annual NAWRB Conference has answers for you. Don’t miss your chance to find out the future of the industry from the experts.