Foreign Buyers, Who Nearly Disappeared During Covid, Finally Return to the U.S. Housing Market

Alice-Christine Merenda and her family, who live in Munich, Germany, had been thinking of moving to the U.S. for years. A professional translator and interpreter, she said she and her husband, Stefano Merenda, wanted to raise their four children bilingually and admired the freedoms U.S. citizens had amid the Covid onslaught, when Germans were completely confined to their homes.

Then, the war in Ukraine began.

“It kind of proved our decision,” said Ms. Merenda, 44, noting that, though it is a country away from Germany, the war seems far too close to home. “It was just another thing that I hadn’t figured possible in our lifetimes. It felt like Europe was no longer the Europe it used to be.” Mr. Merenda, a 47-year-old smart home technology entrepreneur, has set up a consulting business in South Florida and the pair are shopping for a four-bedroom home in the Boynton Beach and Boca Raton areas that can accommodate their large family—which includes a set of twins. Their agent, Veronica Peters of Premier Estate Properties, has already shown them a string of homes. Their budget: Around $2 million.

Real-estate insiders across the country say they have seen an acceleration in the number of overseas buyers returning to the U.S. market. While international purchasers have been trickling back for more than a year following their relative absence amid the pandemic, the past three months have seen their levels of interest return to near prepandemic levels, insiders said. That is thanks to a combination of a drop in Covid restrictions across the world, especially in previously strict countries like China, as well a range of political-economic shifts across the globe, especially the Russia-Ukraine war and election tumult in Brazil.

The influx of foreign buyers is a sharp change in local markets that have been softening amid rising interest rates and recession fears. The slowdown follows an intense Covid-fueled property boom that drove most U.S. markets up in 2021 and early 2022.

“It was the domestic buyer that led the recovery out of Covid,” said John Gomes of Douglas Elliman, who said foreign buyers currently account for about 40% of his team’s business, which has offices in New York, Miami and Los Angeles. That is up from just over 30% before the pandemic. “It is the foreign buyer that is leading the recovery this time around. It’s very, very apparent.”

Data on the volume of transactions by foreign buyers is difficult to come by, since listings sites like Redfin don’t keep track of a buyer’s origins. However, there is some evidence to back up claims of a return of foreign buyers.

New development marketing firm Corcoran Sunshine, which sells condos across New York City, reported a 25% increase in foreign visitors to its portfolio buildings in January 2023 compared with January 2022, led by a strong uptick in visitors from China and the Middle East. Ryan Schleis, senior vice president of research and analytics at Corcoran, said that, compared with the slowest period of sales during the pandemic, April through December 2020, the company’s portfolio saw more than triple the number of foreign visitors and more than double the number of international buyers during the same period in 2022.

He attributed the uptick in part to China dropping its zero-Covid policies, allowing Chinese nationals to finally travel more freely to the U.S. “It was a real unknown when and if, after the pandemic, the Chinese buyer would come back to New York,” he said.

By contrast, Corcoran Sunshine has “clearly seen a pullback” over the past 10 months in activity by local and domestic buyers, he said.

In South Florida, some developers report seeing a recent increase in interest from buyers in Brazil. At Nexo Residences, a 254-unit condo project in North Miami Beach, the developers said they have seen a 30% increase in interest from Brazilian buyers since October 2022 amid political turmoil in the wake of the country’s presidential elections. Former Brazilian President Jair Bolsonaro has said he plans to return to Brazil this month to lead the political opposition to President Luiz Inácio Lula da Silva and defend himself against accusations he incited attacks by protesters on government buildings in January.

In Los Angeles, brokers report a significant rise in interest from overseas buyers and some of the area’s recent big ticket deals were inked by foreigners. A $55 million Beverly Park home sold by actor Mark Wahlberg was purchased by a Chinese billionaire, according to people familiar with the situation.

The amount of Chinese buyers we’re seeing now is unprecedented,” said Tomer Fridman, an agent with Compass in Los Angeles. “And the price points are high.”

Mr. Fridman said he also recently signed an $8.3 million deal in Beverly Hills with a buyer from the U.K.

Los Angeles agent Gary Reavis of Forward Luxury Real Estate said he has also worked with two sets of Singaporean buyers over the past few months, one of whom purchased a home after seeing it only on FaceTime.

The other, Singaporean entrepreneur Ivan Chin, whose company is a global supplier of nutritional drinks, purchased Château des Anges, a roughly 9,000-square-foot Versailles-style mansion that sits just above West Hollywood’s Sunset Strip. Mr. Reavis said he worked with Mr. Chin for about three months on the deal, researching and touring the available inventory of homes in the $10 million to $100 million range. Mr. Chin was looking for a property to use as a pied-à-terre but that would also be a solid investment in the long term, Mr. Reavis said. Almost every night, they went to dinner at fancy restaurants and talked about the houses they had seen that day, he said.

“For him, it was about investing in the U.S. economy, a place he thought was safe,” Mr. Reavis said, noting that Mr. Chin is actively making offers on several more properties in the area. Mr. Chin could not be reached for comment.

The spending spree by overseas buyers marks a sharp turnaround from the darkest days of the pandemic, when foreign interest in U.S. real estate dried up. Data from the National Association of Realtors shows that between April 2020 and March 2021, the volume of purchases by international buyers across the U.S. was just $54.4 billion, the lowest on record since 2009. That improved to $59 billion between April 2021 and March 2022, though that was still the second-lowest figure since 2009.

Agents in New York say that many of their overseas buyers are interested in prime Manhattan areas like NoMad, the area around Madison Square Park.

Sebastian Steinau, an agent with the Corcoran Group, said he sold two apartments in December, priced at $3.975 million and $6.5 million, at the Ritz-Carlton Residences in NoMad to buyers from Austria and Germany. The Austrian buyer, who works in the wine business and plans to use the apartment as a pied-à-terre, said that she and her husband were spooked by the war in Ukraine and wanted to diversify their assets beyond Europe, Mr. Steinau said.

“Everything they had was in the eurozone,” he said. “You want to have diversification not only in your real-estate investment, but also a currency hedge.”

Erin Boisson Aries, executive marketing and sales director for the Ritz-Carlton, said that seven of the 15 buyers at the project so far have been from overseas, including several buyers from Europe.

French television producer and writer Emmanuelle Rey Magnan, 52, said she was similarly drawn to the NoMad area and is eyeing apartments priced up to around $2.5 million, including a one-bedroom unit on the 46th floor of Madison House, a new development on East 30th Street. She recently launched a new television production company, Story Island Prods, and plans to be in the U.S. more frequently to do co-production deals with U.S. streaming services. Her husband, Yann Magnan, is a founder of a fintech firm that also has clients in New York, she said. She said she tries to ignore the exchange rate between euros and U.S. dollars, which hasn’t been favorable to Europeans since the beginning of the year.

The couple’s agent, Kleopatra Phili of Brown Harris Stevens, said that many of her foreign clients are just following up on plans they intended to enact years prior but were derailed by the pandemic.

“During Covid, people decamped to a place of normalcy, safety, maybe familiarity within their own countries or locations,” she said. “Now, they’re getting back on track with what they intended.”

Some overseas buyers said they see the current headwinds in the U.S. market as an opportunity to enter at a more accessible price. The benefits of buying in the U.S. and diversifying their portfolios outweigh the downside posed by unfavorable exchange rates with currencies like the euro and the Australian dollar.

Australian couple Monika Muthyam, 30, and Raghav Saggar, 31, said they are scouting L.A. homes in the $4 million to $7 million range with an eye toward relocating to America, where they have enjoyed numerous vacations. Mr. Saggar, a financial trader, said he sees living in the U.S. as a chance to grow professionally and the time zone as being more friendly to his work in crypto markets. Once the couple settle on a home for themselves, they are planning on getting into real-estate investing and development, they said.

Australian couple Monika Muthyam and Raghav Saggar are on the hunt for a home in Los Angeles.

“The property markets around the world right now are moving down, but with the new home in the U.S., we can capitalize on the price,” he said. “So from a market entry point of view, it makes sense.”

Still, agents said they are aware that, despite the uptick, foreign interest in the U.S. can shift quickly.

Nikki Field of Sotheby’s International Realty said she was working with three different Chinese buyers, one of whom had secured a “great deal” on a roughly $32 million Manhattan apartment, when “all three of them simultaneously went dark” a few weeks ago. She guessed that their silence had to do with the “balloon fiasco,” when U.S. officials shot down what they described as a Chinese reconnaissance balloon off the coast of South Carolina.

“It’s always been this way,” she said. “Any interruptions in relations between China and the U.S. that could affect their security or their comfort level with their funds being here and they go very, very quiet.”

Content courtesy of WSJ