AUSTIN (KXAN) — Texas is the 2nd most desired housing market for foreign buyers, but that money has decreased nationally over the last year, according to a new report from the National Association of Realtors.
NAR Chief Economist Lawrence Yun said that foreign investment is slowing down due to “tight inventory” in the U.S., but that it opens up more space for domestic buyers.
“If it was the case that foreigners were a much heavier presence, I think that would have raised a tremendous amount of frustration among domestic buyers,” Yun said. “If it were 15 years ago when we had an abundance of inventory and we wanted a buyers to pick up those properties, but we are in a different environment with limited inventory.”
Who’s interested in Texas? Buyers from Mexico (42% of their purchases) and India (13% of their purchases). Entities from Canada (4% of purchases), China (7%) and Colombia (5%) looked more to Florida and California instead of Texas.
Those top five foreign buyers spent around $2.5 billion in the Texas economy, based on the report’s data. Nearly $1.17 billion of that came from Mexico and around half a billion each from India and China.
Nationally, the majority of purchases (76%) are for single-family homes, with 45% of buyers purchasing property for use as a vacation home or rental, according to the report. On average, purchases by foreign buyers are $780,300 — the highest since 2009 — with a median of $475,000.
The NAR’s report said that the group started tracking these numbers in 2009 and that the past year saw the lowest number of homes bought by foreign entities.
“A stronger dollar makes US property more expensive [for foreign buyers],” Yun said. “Places like Texas or Florida, where we have seen some legislation introduced specifically targeting some countries like China.”
During the 2023 regular session of the Texas Legislature, Senator Lois Kolkhorst, R-Brenham, authored a bill that would have prohibited real estate purchases by governmental agencies, companies and citizens of China, Iran, North Korea or Russia.
The original version of the bill drew criticism from Texas Democrats, leading to an amended version of the bill that removed the restrictions on individuals. That version passed in the Texas Senate but died in the House State Affairs Committee.