- Foreign purchases of U.S. homes have dropped by half over the last two years, a fresh blow to the top end of the market in New York City, Miami and cities in California.
Foreigners bought less than $78 billion worth of U.S. residential real estate in the year that ended in March—a 36% decline from $121 billion the previous year, according to a report released Wednesday by the National Association of Realtors.
Their pullback is leading to price cuts in several coastal cities and causing new condos to sit empty.
A slowing global economy, a simmering trade dispute with China, President Trump’s anti-immigration rhetoric and a stronger U.S. dollar have made America a less hospitable place for foreigners to invest over the last year, economists and real-estate agents said.
Purchases by foreigners are now at the lowest level since 2013, when buyers from China and South America first began entering the U.S. market in large numbers in search of bargains and a safe place to stow their capital.
“It’s quite striking in terms of the magnitude of the decline,” said Lawrence Yun, the Realtors’ chief economist.
Real-estate agents said the pain from the foreign pullback is palpable when they try to sell high-end condos in Miami and New York or mansions in southern California and Seattle.
“Generally speaking, we are in the largest market correction since the Great Recession in New York City,” said Martin Eiden, a real-estate agent at Compass, who has had to cut prices on listings from Midtown Manhattan to Brooklyn in the last year.
“The foreign buyers have pretty much all but disappeared,” he added. “I’m helping a lot of foreign buyers get their money out of this country as fast as possible.”
Mr. Eiden said the impact has been felt most at the top end of the markets at ultraluxury residences like Manhattan’s One 57, a 75-story skyscraper known as “the billionaire building.” But it has rippled to lower-end purchases, such as $800,000 one-bedroom apartments parents were buying for children attending New York University. That has dried up as they now question whether New York is a safe investment given the slowing market.
Both nonresident foreign buyers and immigrants cut back on U.S. home purchases in the year that ended in March. The largest drop was in buyers from China, who purchased just over $13 billion worth of U.S. homes during that time period, a 56% decline from the prior 12 months.
Chinese buyers had been especially active in California. Mr. Yun said the pullback may be beneficial if it helps alleviate a housing shortage. But in places like New York and Miami, where there is a glut of luxury condos, it is less welcome.
“Our foreign buyers have been really driving the luxury market for several decades. Those buyers for various reasons have slowed down their purchasing,” said Ron Shuffield, president of Berkshire Hathaway HomeServices EWM Realty in south Florida. “In many cases, the currency exchange rates are still so unfavorable, they don’t have the buying power they used to have.”
Jason Haber, a broker at Warburg Realty Partnership, said he recently toured 18 prospective buyers from Shanghai, who were looking for condos in the $30 million and up range. It had been so long since he had worked with Chinese buyers that he had to re-familiarize himself with the mobile app, WeChat, which is popular with Asian buyers and has a translation feature.
Even though he showed the would-be buyers through a number of units that have undergone significant price cuts over the last year, many were wary that the market hasn’t yet hit bottom. They plan to wait at least another six months before buying.
“When you see something that’s been on the market for two or three years, you’re not in a rush to buy it,” he said.
—Arian Campo-Flores contributed to this article.
Write to Laura Kusisto at firstname.lastname@example.org