Unaffordable, harder to enter and showing no signs of mortgage rates going down: the U.S. housing market has become an increasingly challenging situation to navigate for many aspiring homeowners, with international buyers also slowly pulling back from it.

According to a report by the National Association of Realtors released earlier this month, from April 2023 to March 2024, purchases by foreign buyers dropped by 36%, totaling 54,300 properties, the lowest number since NAR started tracking this data in 2009. Additionally, the total amount spent by foreign buyers on U.S. existing homes dropped significantly, adding up to $42 billion last year, which is over a 21% decrease from the previous year.

A possible explanation might be that while the soaring U.S dollar’s stability makes for much cheaper international travel, it also creates a hostile landscape for potential foreign buyers – high mortgage rates combined with largely unattainable home price, as well as a dwindling housing inventory are actively discouraging international investors.

Foreign buyers have always coveted U.S homes, thanks to unrestricted home ownership and property rights, alongside major return on investment, making U.S home ownership a lucrative business venture. However, there seems to be a climate of trepidation due to broader sociopolitical and economic issues at play: geopolitical tensions, global economic shifts and more rigid U.S immigration policies make foreign investors turn to international destinations offering them political stability and safety in terms of lifestyle and investment opportunities.

This decrease in foreign real estate investment may very well negatively affect the U.S housing market, bringing reduced competition and lower demand for luxury properties, seeing that international buyers usually set their sights on higher-end homes. Accordingly, local economies that heavily rely on said investments could face significant losses.

The uncertainty surrounding the impeding U.S election is another factor affecting foreign investment, as experts expect the upcoming election and the political shifts it comes with, might work as a deterrent for international buyers for the foreseeable future, creating a “wait-and-see” approach.