You don’t have to live in the U.S., much less possess a green card or U.S. citizenship, in order to buy a home here — a fact that’s not lost on foreign investors.
In raw numbers, this 4% of purchases isn’t huge: it’s approximately 209,000 U.S. homes going to buyers who either reside outside the U.S. or have been living in the U.S. for less than two years‘ time. (These figures come from the National Association of Realtors, covering the year ending March, 2015, as reported in “As their economy slips, the Chinese are buying U.S. homes,” Associated Press, Omaha.com, September 19, 2015.)
Nevertheless, because the purchases are concentrated in certain areas of the U.S. (New York, San Francisco, Seattle, Irvine, California, Chicago, and parts of Arizona, Texas, Florida), the impact is catching the attention of real estate industry insiders and the media.
What might this buying trend mean for people buying or selling homes in the United States?
On the buying front, the news isn’t good: You’ve got increased competition in some already tight markets. What’s more, it’s coming from buyers who may be paying all cash: The very reason some of them are investing in U.S. real estate is because they’ve accumulated enough to need to park it somewhere. Investments in their own country (as in the case of China) may be going sour.
The only bright spot for home buyers is that, under current immigration law, buying a house doesn’t come with any right to actually settle in the U.S. permanently. So the competition isn’t likely to go too crazy, being limited to people who either already have a U.S. visa or who are willing to care for a house from afar, most likely by hiring a management company.
If you’re planning to sell your home, the news is better. More potential buyers! All-cash offers, likely with no financing contingencies! But before you lose your head and start heavily advertising your property in foreign-language newspapers, realize that selling to non-U.S. buyers comes with risks, too. Some of them face major government restrictions on transferring their funds from to the U.S. – and neither they nor you may know until your other prospective purchasers have moved on whether the deal is really going to go through.
As Patricia Wangsness, a Bellevue, Washington-based Realtor told me when I was preparing the book Selling Your House: Nolo’s Essential Guide, “We’ve had to develop a policy of not going into contract with an overseas buyer unless the earnest money deposit has cleared.”
What about the significance of this purchasing trend for homeowners whose new neighbors may be from another country? It depends. In the case of those who will actually be living in the homes, you may have some interesting new neighbors. But in the case of those buying investment properties, you may have some homes sitting empty nearby – either because the owner plans to use it for a few months out of the year (six months is the maximum they could spend on the standard B-2 tourist visa) or because they don’t feel any urgency to bring in tenants.