After Britain voted to leave the European Union, business and economic leaders began to grow a bit frantic. How will the exit impact foreign investment in U.S. real estate following the decision?
Likely, it’s going to depend on the location.
While cities on each coast may see a bit more of an impact, experts believe the Chicago implications will be much smaller.
According to a recent report from the Chicago Tribune, Illinois ranks among the top 10 states for foreign real estate buyers, and experts at the National Association of Realtors (NAR) believe the trend will continue.
Because the state doesn’t have massive pools of buyers like Los Angeles and New York City tend to, the expectation is that trends will continue in the same vein.
Another boon for Chicago real estate is that international buyers are typically seeking a permanent home rather than a second home or vacation property. The state of Illinois ranks as the No. 4 most popular for buyers from Mexico and No. 5 for buyers from India.
Throughout the nation, the sales volume has evened out despite the dip in overseas money.
“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,” Lawrence Yun, NAR’s chief economist, said in a recent report.
“While these obstacles led to a cool down in sales from non-resident foreign buyers, the purchases by recent immigrant foreigners rose, resulting in the overall sales dollar volume still being the second highest since 2009.”
Trends in foreign investment
Foreign investment in American real estate has slowed in 2016 by 1.3 percent over last year to $102.6 billion. However, the volume of sales increased by 2.8 percent.
Foreign real estate purchases are typically made on properties higher than the median home price in the U.S., which could be a reflection of the type of buyers and the location in which they are purchasing. The typical foreign buyer price was reported at $277,380, compared with the U.S. median of $223,058.
Of the foreign investors, the largest volume comes from China, followed by Canada, Mexico, India and the United Kingdom.
