by Steve Randall
15 Oct 2018
The influence of foreign homebuyers on housing markets is a much-debated one but a new report suggests a new take on the correlation between foreign ownership and high prices.
A study of US Census Bureau data by mortgage lending platform LendingTree suggests that a market’s high home prices may attract foreign homebuyers rather than them being the cause.
The study looked at where foreign homeowners are most prolific and found that, generally, cities with the largest share have higher home prices.
Prices in the top 10 cities for foreign-born owners average U$491,750 compared to $167,560 for the bottom 10.
Miami is a key exception, topping the list with foreign residents making up 26% of all homeowners although the median price in Miami is well below the average for the top 10 at $278,700.
Foreign buyers attracted to dynamic economies
LendingTree’s chief economist Tendayi Kapfidze says that the greater share of foreign owners in high-price markets may be down to opportunity.
“It’s likely that immigrants gravitate towards these cities which have higher home prices, as they also have more dynamic economies and thus more employment opportunities,” he explains. “The proportion of highly-skilled immigrants is also higher in these cities which puts some upward pressure on home prices as a secondary effect.”
He added that homeowners in cities with high foreign-born populations benefit from faster home price appreciation, creating opportunities for them to access this wealth via refinancing or home equity extraction.
This extra spending can in turn boost the economy or provide capital to fund new businesses.
Source : MORTGAGEBROKERNEWS.CA