Foreign buyers pay cash… myth or reality?
One of the strongest myth is that all foreign buyers buy real estate in cash. While home sales to international home buyers in the United States plunged from $121 billion to $78 billion (CNBC), all eyes are on the Chinese buyers.
“The Chinese government tightened its grip on the outflow of cash to purchase foreign property”
CNBC, 17 July 2019
What percentage of international home buyers actually pay cash?
What the National Association of Realtor’s annual report shows is actually that not all foreign buyers are cash buyers. Indeed, only 41% of foreign buyers paid all-cash (20% among all existing-home buyers).
41% of Foreign buyers paid all-cash
NAR’s annual report
Chinese pay in cash: WRONG!
Chinese buyers pay in cash… this is WRONG! Indeed, looking at the type of financing among major foreign buyers (NAR report), we learn that Canadians are the ones who buy in all-cash transactions. Indeed, while only half of the Chinese pay all-cash, this proportion is 75% with the Canadian buyers.
Non-resident foreign buyers pay cash
However what is correct is that non-resident foreign buyers tend to pay more in cash, that residents. Therefore it tends to prove that home loans to international home buyers are more complicated to get, but also that non-resident foreign buyers are looking to secure their savings, in a currency still seen as strong and stable on the long term.
