Economists' Outlook

Housing stats and analysis from NAR's research experts.

Home Purchases by Foreign Buyers are Likely Easing

Over the 12-month period April 2014‒March 2015, the National Association of REALTORS® estimated that the dollar volume of home purchases of foreign buyers rose to $102 billion, led by purchases from Chinese buyers. While NAR is yet to conduct its annual survey in April 2016, current economic indicators could prove challenging to foreign buyers and may indicate an easing of foreign demand. [1]

  • Rising U.S. home prices. U.S. home prices have continued to increase strongly, making homes less affordable for domestic and foreign buyers alike. As of January 2016, the median price of an existing home stood at $213,800, or eight percent higher compared to the levels one year ago.
  • Stronger dollar. On top of the strong increase in home prices, the dollar has also strengthened against most currencies, which means that foreign buyers have to shell out more of the local currency for every dollar of purchase. For example, the dollar has appreciated against the Brazilian real by a whopping 54 percent, against the Mexican peso by 23 percent, and the Canadian dollar by 15 percent.

Given the increase in U.S. home prices and the appreciation of the dollar, the price of a typical U.S. home measured in Brazilian real was 67 percent higher in January 2016 compared to a year ago. Measured in Mexican pesos, U.S. home prices were 33 percent higher. Measured in Canadian dollars, U.S. home prices were 27 higher (see Chart 1).

percent increase
According to data compiled by the International Monetary Fund’s Global Housing Watch project, the U.S. has experienced one of the more robust rates of housing price growth.[2] After adjusting for inflation, U.S. home prices increased in real terms by 6.2 percent in the second quarter of 2015. In comparison, house prices decreased in real terms in countries such as China (-4.8%), Brazil (-5%), and Russia (-11%). In Mexico, house prices increased in real terms at a more moderate pace (3.3%), as well as in Canada (4.2%).

  • Slower economic growth. The countries that have been traditionally the top sources of foreign buyers – China, Canada, Latin America, and Europe – are expected to grow at a slower or moderate pace in 2016. The global slowdown in 2016 is essentially arising from two fronts: the slowdown in the Chinese economy and the oversupply in oil production that has led to falling oil prices and slower economic growth in oil-producing countries such as Canada.

gdp growth rates

  • Tighter capital flow monitoring in China. Given the speculative attacks on the yuan, China’s State Administration of Foreign Exchange has enhanced its systems and regulations for reporting and monitoring capital flows.[3]  This is expected to have some impact since foreign buyers typically pay cash. In January 2016, China’s State Administration of Foreign Exchange launched an individual foreign exchange monitoring system. Under this system, individuals are not allowed to evade their purchase quota of $50,000 per year per person. Those individuals who borrow another individual’s quota will be put on watch list for the current year and two consecutive years. Banks are required to report any quota evasion within 20 days and to assign technicians to the individual foreign exchange business monitoring system.

In summary, foreign buyers are facing some headwinds. On a positive note, the slowdown in demand from foreign buyers may help ease the tightness of supply in the market.

[1] Thanks to Danielle Hale Hedge, Managing Director, Housing Research, for reviewing and editing this blog.

[2] See

[3] See

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.