Strong dollar curbs international buyers of US homes
In the first four months of 2014, 2.5% of all homes sold in the United States were sold to foreign buyers. In the same period in 2015, that percentage dropped to 2.0%, down by nearly a fifth. Total U.S. home sales rose by 9% year over year for the same period.
According to a report in June from the National Association of Realtors (NAR), three-quarters of real estate agents reported that foreign exchange rates have a moderate to very significant effect on their foreign buyers.
Five countries account for 51% of all home purchases by foreign buyers: Canada, China (including Hong Kong and Taiwan), Mexico, India and the United Kingdom. And just four states account for half of all international sales: Florida, California, Texas and Arizona. More than 55% of international sales are all cash. According to the NAR report, unit sales of homes to foreigners declined by 10% in the 12 months between April 2014 and March 2015.
Eurozone countries experienced the largest currency decline compared with the dollar, down 23% in the fourmonth period from January through April 2015, compared with the same period in 2014. Sales to eurozone buyers dropped 32%. The Australian dollar fell 16% year over year and U.S. home sales to Australian buyers fell 24%. The British pound lost 10% compared with the greenback and purchases by U.K. buyers fell by 29%.
In each of the past three years, Chinese buyers have dominated the international sales numbers. Chinese buyers purchase homes valued at an estimated $12.8 bln in 2013, $22.0 bln in 2014 and a projected $28.6 bln in 2015. The Hong Kong dollar actually has appreciated against the U.S. dollar, and the Chinese yuan had changed little until equity prices began to collapse last month.
Hardest hit by the strong dollar are Canadians, who have seen the loony depreciate by 12% and who have cut their home buying in the United States by 34%. Almost half of sales to Canadians were located in the Miami-Fort Lauderdale-Palm Beach area, where home prices have risen as much as 8% year over year, according to CoreLogic. Coupled with a depreciating currency, the cost of house in south Florida jumped from 20% to 25% between the first four months of 2014 and the same period this year.