Real estate in the United States is in high demand. However, there has been an interesting change amongst international buyers in recent years: instead of luxury homes, investors have shifted towards cheaper properties. This is due to a number of factors, not the least of which is that fewer and fewer nonresident foreign buyers are investing in the market. A stronger US dollar, combined with rising home prices, is simultaneously costing foreign investors consistently more when they choose to invest abroad. As Lawrence Yun, chief economist of the National Association of Realtors (NAR), has stated, "Weaker economic growth throughout the world, devalued foreign currencies and financial market turbulence combined to present significant challenges for foreign buyers over the past year." Yet the acquisitions made by recent immigrants to the United States have risen, resulting in the overall sales dollar volume peaking at its second highest rate since 2009. Interestingly, the recent Brexit vote has also spurred foreign buyers to acquire more US real estate as the value of UK property (particularly homes in London) is subject to uncertain fallout in the wake of the referendum.
Yet the demographics of foreign purchasers of US property are changing. Buyers from China are outstripping buyers from all other countries-their dollar volume of sales ($27.3 billion) surpasses the totals of its four runner-up nations combined. Properties in the United States bought by foreigners do typically have a higher valuation than the median US home-however Chinese buyers tend to buy the most expensive homes overall, with a median price of $542,084. As global financial markets have remained unpredictable, real estate is seen as one of the safest investments still available. Property in the United States is relatively cheaper than real estate in Asia, and the explosive growth of the Chinese economy within the last two decades has yielded a large amount of very wealthy people willing to invest abroad as their economy now begins to slow. As Yun went on to state, "Although China's currency modestly weakened versus the U.S. dollar in the past year, it's much stronger than it was five to 10 years ago, thereby making U.S. properties still appear reasonably affordable over a longer time span."
Between April 2015 and March 2016, foreign buyers acquired $102.6 billion in residential property in the United States. Objectively, this trend is a 1.3 percent drop in dollar volume-however the number of properties purchased higher by 2.8, at 214,885. The drop in dollar volume can most likely be attributed to the types of properties that investors are purchasing as well as the locations of said properties. The intensely sought-after, expensive markets of New York City, Washington D.C., and San Francisco (among others) are becoming too pricey for many foreign buyers. As an alternative, they are setting their sights on the properties for sale in cheaper, smaller cities in the Midwest and Southeast United States. This trend is consistent among both buyers who are looking to invest and those who are legitimately looking for personal property abroad. Real Estate ETF's to watch include iShares U.S. Real Estate ETF (IYR), SPDR Dow Jones REIT ETF (RWR), and Vanguard REIT ETF (VNQ). Among the stable property-owning real estate investment trusts are Realty Income
