America: still one of the most desirable countries in which to own a home

For many global buyers, US property represents a safe haven investment – with multiple other advantages


Helen Burggraf

Helen Burggraf

Freelance Journalist

A strong US dollar, rising interest rates and the prospects of US economic growth losing steam during 2019 might be expected to cool foreign buyers’ interest in American property. But not a bit of it.

America remains one of the most popular places in which globally mobile, wealthy families seek to buy homes.

Key markets of interest to foreign buyers – which tend to be large urban centres – are outcompeting overseas destinations, particularly as governments in other parts of the world introduce legislation to discourage foreign buyers.

But what are the latest trends in who is buying, and where? And what are the key considerations?

US homes retain their allure for overseas buyers – but the buyers are changing

Lawrence Yun, Chief Economist for the National Association of Realtors, says interest continues to be concentrated on major metropolitan areas that foreigners have always favoured, such as New York, Miami, Los Angeles and San Francisco. But second tier markets are growing fast, he says.

Paul Tostevin, Associate Director of Savills’ World Research team in London, also notes this trend, pointing as examples to Seattle and Austin, Texas, and Raleigh in North Carolina.

The shift is partly down to who’s buying. Liam Bailey, Global Head of Research for Knight Frank, says a significant growth area is being driven by “Asian demand for properties located near major universities and some schools”.

This reflects a powerful Asian demand for a top US university education for their children, he says.

Asian parents are hoping to avoid the cost of renting, while at the same time giving offspring a US base from which to launch their careers in the US. Chicago and Boston are two markets benefiting from this activity, he argues.

“Another trend we’ve been seeing is a lowering of the price point Asian investors are looking at,” Liam Bailey adds.

“One reason is that the wealthiest Asians have already invested overseas. Now you’re getting a new group of investors who are looking for a slightly lower entry point – closer to the US$600,000 to US$700,000 level, rather than the US$1 million to US$1.5 million level we were seeing three or four years ago.”

Chinese buyers are far and away the biggest group of purchasers of US residential property, according to NAR figures, which have placed them at number one position for six years.

In the 12 months to the end of March 2018, they spent an estimated US$30.4 billion, almost three times the US$10.5 billion spent by the second-largest foreign buyer group, the Canadians.

Altogether, just five countries accounted for nearly half (49%) of the dollar volume of US residential property purchases by foreign buyers, the NAR report revealed: in addition to China and Canada, in declining order of total sales came the UK, India and Mexico.


Perhaps not unexpectedly, foreign buyers tend to target costlier properties than resident Americans, with Chinese buyers paying the most on average.

Foreign buyers of US homes paid a median US$292,400, compared to the median price for local purchasers of US$249,300 – Chinese buyers paid US$439,100.

Almost half of all international transactions were in cash, compared to just one in five local transactions.

Why buy? It depends on the nationals involved. Some 86% of Indian buyers, for example, said they planned for the property to become their primary home, the highest percentage of any nationality.

Canadian buyers were the most likely to use their US property as a vacation home, while Chinese buyers were the most likely to say it was bought to provide student accommodation.

Politics and stability

While many in the US talk of political instability under President Donald Trump, this is not what many other nationals understand by the term, explains Reaz Jafri, a New York based immigration lawyer and Head of Withers LLP’s recently launched Withers Global Advisors consultancy.

“In many countries throughout Asia and Latin America, people are concerned about political instability of a type that is very different to what we in the US consider,” he said. “In countries where there are mass kidnappings, military coups and corruption, the US is still seen as a desirably stable place.”

Brexit also appears to be having an effect, he says, describing a “surprisingly strong” stream of enquiries on the part of wealthy British citizens.

“Normally British investors are wary of the tax implications,” he notes, nodding to the fact that US taxes apply to “US persons” wherever they live in the world. “But as a result of Brexit, that’s now not seen to be as important, for some, as the option of being able to work and live in the US.”

Bargain prices? Don’t forget costs of ownership

Large, luxury properties may be cheaper in US locations on a square foot basis than in other world destinations. But that’s not the whole picture.

Paul Tostevin of Savills stresses the need for foreign buyers of US homes to consider ownership costs as well as purchase costs when comparing, say, the price of a home in New York or Miami with one in London or Hong Kong.

Pointing to a report his office issued in July, he notes that over a five-year holding period a US$2 million property in New York will end up costing a non-resident foreign buyer more to purchase, hold and sell than a US$2 million property purchased in Dubai, for example, where only modest government registration fees apply at the point of purchase.

In Vancouver, Hong Kong and Singapore – three jurisdictions that have introduced stiff stamp duties on foreign purchases of property in an effort to cool their markets – total costs are the highest of those surveyed.

Reaz Jafri also warns of the need for advice on how ownership is structured. Buying multi-million-dollar US homes via a company structure rather than in one’s own name is generally advisable, he says, because this means they aren’t subject to estate duties when the owner dies.


Helen Burggraf

Helen Burggraf

Freelance Journalist

Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change.  The content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.

Contact Schroders Wealth Management

To discuss your wealth management requirements, or to find out more about our services and how we can help you, please contact:

Marc Brodard

Marc Brodard

Head of Private Clients - Switzerland