U.S. Real Estate Market Faces Disruption
Everyone has been affected by the COVID-19 crisis in one way or another, no more so than real estate, particularly the international market in the U.S.
Real estate accounts for nearly 1/5 of the U.S. economy, so when health concerns spread and state-at-home and lockdowns orders were enacted globally, the real estate industry took a collective breath. While buyers in the U.S. inexplicitly went on a buying spree, the same was not true of international buyers. The market felt the impact.
Sales of U.S. homes to foreign buyers fell by 31% from April 2020 to March 2021, according to the National Association of REALTORS. At just 107,00 properties, it was the lowest unit volume and lowest dollar volume since 2011.
“The big decline in foreign purchases of homes in the U.S. in the past year is no surprise, given the pandemic induced lockdown and international travel restrictions,” NAR chief economic Lawrence Yun said in a release.
Foreign buyers also responded to the uncertainty of the American real estate market, particularly early in the pandemic. For Florida, the news was not all bad. For the 13th straight year, the Sunshine State led among top destinations for international buyers with 21% of all international purchases. California ranked second (16%), followed by Texas (9%) and Arizona (5%). New Jersey and New York tied at 4%.
Perhaps, in more good news, international buyers still believe the U.S. is a good investment. Home prices are comparably more affordable, especially for buyers in places like Hong Kong and London, and opportunities to use homes for vacation rentals is strong. Others, particularly Chinese buyers, seek homes for their children taking advantage of educational opportunities in the U.S.
While acceptance of vaccines and lifting of travel ban restrictions are expected to have a significant impact, technology may make the biggest difference. Just as technology has supported virtual home buying in the U.S., it has been adopted internationally, helping foreign buyers feel more comfortable in their decisions.
Agents and brokers can meet face-to-face via Zoom and other platforms. From virtual video tours and 3-D model renderings as well as applications such as Google Maps and Google Duo, consumers globally have more access from their homes to U.S. markets than ever before. Juwai, a Chinese website for buyers of overseas property, says it now features more than 5,000 virtual tours. Every aspect of the home buying journey from walk-throughs, negotiations, contractual signings and closings can take place without ever setting foot on a property from nearly anywhere in the world.
Further, the impact of new work from home opportunities by global disruptors remains to be seen.