Foreigners dramatically shrink homebuying in California, U.S. – Daily News

on Jul18
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“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: Foreigners dramatically pull back their buying of U.S. and California homes.

Source: National Association of Realtors

Trend reported: 183,100 foreigners bought homes nationwide in the 12 months ended in March, down 31% from 266,800 in the previous year. My trusty spreadsheet says 22,000 foreigners bought homes in California in the 12 months ended in March. That’s down 41% from 37,000 in the previous 12 months.

The dissection

Folks complain when foreigners — or any “non-traditional” house hunter — are buying. Then others fret when they are not.

On one hand, buyers from out of the country are a small slice of California house hunters.

Last year, the California Association of Realtors said 372,000 existing homes sold. If my calculations are correct, foreigners were 6% of last year’s statewide homebuying market. The previous year, 442,000 homes sold statewide — 8% of which were bought by foreigners.

Now look at the foreign pullback this way: Non-U.S. buyers acquired 15,000 fewer California homes in the past year. That translate to 30% of the 50,000 statewide drop for all home purchase. That’s impactful, especially in housing niches foreign-buyers often prefer: newer, pricier homes in many of the state’s ethnically diverse communities.

Upon further review

Hey, California homebuying overall went from “must do” to “meh” in the past year. House hunters from other nations just pulled back a tad more aggressively.

For starters, California had 12% of all U.S. purchases by foreigners vs. 14% the year before.

California was the top destination for buyers from China, Hong Kong and Taiwan — claiming 34% of all Chinese purchases nationwide. But that’s a big slice of a shrinking pie: Deals nationwide from these Asian nations last fell fell 51% to 19,900.

That drop put Canada in a tie with the Chinese trio for the top number of U.S. buyers. And California got only 3% of those deals from our neighbors to the north — ranking the state fifth nationwide. All Canadian deals in the U.S. fell 27% to 19,900.

Here’s how California fared with other countries:

United Kingdom: No. 2 share with 20% of U.S. deals. Deals nationwide from the U.K. last fell 42% to 5,200.

India: No. 3 with 10% of U.S. deals. Nationwide, Indian purchases rose 21% to 15,900.

Mexico: No. 2 with 10% of U.S. deals. Nationwide, Mexican purchases fell 52% to 9,700.

How bubbly?

On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … THREE BUBBLES!

Housing has lost a once easy-to-please buyer. U.S. housing is seen by many wealthy foreigners as a bargain, even in high-cost California.

There’s plenty of geopolitical forces to blame for this dip. China has been nudging its citizens to prune their foreign investments of all sorts. And President Donald Trump’s tough talk on trade and immigration certainly does not motivate foreigners to do anything but essential business in the U.S.

What these stats do tell us is which key house hunter is missing in today’s slow-selling market. What logic says is that nobody should count on foreigners returning any year soon.

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