International Demand for U.S. Housing 2016 International Housing Association Meeting February 17, 2016, Washington, D.C. Scholastica (Gay) D. Cororaton Research Economist National Association of REALTORS®

Outline of Presentation Size of purchases of foreign buyers in the U.S. Characteristics and preferences of foreign buyers Impact of global slowdown on foreign demand for U.S. properties

Foreign Buyers: About Four Percent of U.S. Existing Home Sales

Sales to Foreign Buyers : About 200,000 Sales Per Year* *Purchases made from April of previous year through March of current year.

Resident buyers (Type A): 52 Percent Non-resident buyers (Type B): 48 Percent

U.S. Existing Homes Became More Affordable to Foreign Buyers

Foreign Buyers: Typically More Upscale than Domestic Buyers

Non-resident Buyers Typically Make an All-Cash Purchase Source: RCI Survey

Foreign Buyers Come From Across the Globe, Led by LatAm and Asian Buyers

Top Buyers: China, Canada, Mexico, India, and U.K.

Top Five Foreign Buyers

Most Currencies Weakened Against the Dollar Except Chinese Yuan

Chinese Foreign Buyers Typically Purchased at Higher Price Range

Top Destinations: Florida, California, Texas, and Arizona

Foreign Buyers: A Key Market in Florida

Canadian Buyers Prefer FL, AZ, HI, CA

Chinese Buyers Concentrated in the West Coast and Key Cities

Indian Buyers Are More Dispersed

Mexican Buyers Prefer TX, CA

U.K. Buyers Tend to Purchase in FL, AZ, and Northeast

Intended Use By Type of Foreign Buyer

Foreign Buyers Tend to Purchase in Urbanized Areas

Detached Single-family: 61 Percent vs. 80 Percent Nationally

Headwinds Facing Non-resident Foreign Buyers in 2016 – Stronger dollar – Higher U.S house prices – Slower economic growth, especially in oil- producing countries: China, Canada, Mexico, Brazil, Venezuela, Russia – Tighter monitoring of dollar outflows in China

Currencies Have Lost Value Against the U.S. Dollar

Median Price of a U.S. Existing Home Is Back to Pre-Housing Crisis Level

Slowdown in Economic Growth

Tighter Monitoring of Capital Outflows

New Regulations Governing Individual Foreign Exchange Transactions Circular of the State Administration of Foreign Exchange (SAFE) on Further Improving the Administration of Individual Foreign Exchange – individual foreign exchange monitoring system launched Jan 1, 2016 – Individuals not allowed to evade purchase quota ($50,000 per year per person) ; those individuals who borrow another individual’s quota will be put on watch list for the current year and two consecutive years – Banks to report any quota evasion within 20 days – Banks to assign technicians to the individual foreign exchange business monitoring system

Conclusions Foreign buyers represent a niche market Foreign buyers come from across the globe and purchase in many states, but transactions still concentrated in a few countries and in a few states Slowdown in growth, slump in oil prices, strong dollar, and tighter monitoring of capital flows in China likely to ease housing demand by foreign buyers in

International Demand for U.S. Housing 2016 International Housing Association Meeting February 17, 2016, Washington, D.C.