Do international buyers really have a significant impact on US housing? The answer is NO, according to a recent surveyby Zillow. But they do influence the higher end of the market.
The Survey
Zillow’s 2017 quarterly Home Price Expectations Surveyhas found that foreign real estate buyers only have a modest impact on the overall housing availability and home prices in the country. Yet, the top end of the market is certainly shaped by this buyer segment.
From the NAR conference last week, we reported that about $102.6 billion worth of residential properties were purchased by international buyers in 2016. This accounted for 214,885 properties. The forum also divulged that most of these foreign buyers have a preference for more expensive real estates.
Still, owing to the current trend of increasing home prices, affordability issues can affect both domestic and international buyers. According to the survey, buying activity from foreigners may decrease or remain relatively the same in 2018. This implies that the foreign segment of the borrower market is not positioned to put a significant pressure on the housing industry in the coming year.
Home prices to hike
Would this trend in increasing home prices carry on ’til next year? Experts seem to think so, rehashing their earlier prediction of home prices rising by 3.4 percent this year to 4.8 percent. The prediction is also affirmative for 2018.
This 4.8 percent prediction is optimistic, the above-historical-average-annual-gain kind of optimistic. With this, the experts anticipate that the home equity growth in the country would exceed $1 trillion for the sixth year in a row, which will continue to hold up consumer confidence in the health of the market and support household spending this year.
Zillow Chief Economist Dr. Svenja Gudell says the international buyer segment just isn’t big enough to outweigh the fueling factors that dictate the dynamics of the housing market. Much of the domestic factors are still to blame for the current trends in housing.
Other report highlights:
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- The biggest share of foreign buyers are the Chinese, taking 14 percent of the share, followed by Canada (12 percent), Mexico (8 percent), India (7 percent), and the UK (4 percent).
- Forty-four percent of international buyers pay their purchases via a mortgage; 50 percent pay by cash, while 6 percent designated as others.
The survey which obtained information from 100 housing experts and economists was conducted by Pulsenomics LLC and sponsored by Zillow.
