Arizona is one of the top 10 places where foreign buyers purchase residential real estate, according to a report by the National Association of Realtors (NAR).
Most foreign buyers in Arizona are Canadians at 60%.
NAR’s 2024 Profile of International Transaction in U.S. Residential Real Estate includes Realtor transactions with foreign clients who bought and sold U.S. residential property between April 2023 and March 2024.
Arizona ranked No. 4 for real estate investment in the country during that time, with 5% of foreign buyers choosing the Grand Canyon State to buy property.
Still, the number of existing homes bought by foreign buyers during that time dropped to 54,300 — the lowest level since NAR began tracking foreign buyer purchases in 2009. This is a 36% drop from the previous period, or 30,000 fewer buyers.
The dollar amount spent by foreign buyers purchases also dropped to $42 billion, a 21.2% decrease from the previous period.
Canadians are Top 1 for US investments.
Overall, Canada is the biggest foreign buyer of U.S. residential real estate, making up 13% of foreign buyers with $5.9 billion in transactions, according to the study.
China and Mexico report for 11%, India is at 10%, and Columbia is at 4% of foreign buyers.
Glen Williamson, CEO and founder of the Canada Arizona Business Council, said that Canadian buyers who sold their Arizona properties often come back to reinvest.
“Canadians are now paying a 43% tax in Canada.” “Many of them want a second house here. It’s not only seniors who come down and spend money”, Willamson said.
“A new generation of young entrepreneurs are now starting small businesses in Arizona with 10 to 30 employees“, he added.
Total trade between Arizona and Canada was more than $5.3 billion in 2023, according to the Arizona Commerce Authority. A Canadian trade office opened in May to strengthen the connection between Arizona and its second-largest trading partner behind Mexico.
An estimated 500 Canadian companies are in Arizona, including the Bank of Montreal — which uses its U.S. subsidiary BMO Bank NA — as well as Circle K and Cold Stone Creamery. Recently, the Montreal manufacturing company Xnrgy started building its U.S. headquarters in Mesa in April.
Williamson, the former Honorary Counsel of Canada in Arizona, said that he’s seen more international flights since COVID-19 delayed international travel four years ago.
Alexandria Van Haren, air service manager for Sky Harbor International Airport, said that Canada’s total passenger and air service recovery is a year behind the U.S., but Phoenix is still leading in passenger demand and scheduled flights.
12 months prior July 2024, Phoenix’s travel demand to and from Canada is 4.2% lower than in 2019, while the U.S. average is down 8.5% from 2019, she added.
Citing Sabre Global Demand Data, Phoenix’s demand compared to 2022 is up 43.35%, she said.
“As the Canadian market keeps recovering, airlines are adding more flights to Phoenix”, she said. “The number of seats available this winter is 8% higher than in winter 2019.”
Foreign real estate buyers prefer all-cash transactions.
While many Canadians enjoy Arizona, the overall top destination of all foreign buyers is Florida, with 20% of them purchasing in the Sunshine State, followed by Texas, California, and Arizona, according to the study.
Even with high mortgage rates, strong demand, and a low supply of housing inventory, U.S. median home prices stayed strong and even increased compared to the previous year, the study says.
The median purchase price for foreign buyers was $475,000, which is higher than the U.S. median price of $392,600 for existing homes sold between April 2023 and March 2024, which is higher than last year’s median price, according to the study.
Focusing on the luxury market, 18% of foreign buyers bought properties that cost more than $1 million during that time.
Cash is king for foreign buyers!
More than two-thirds of Canadian (69%) and Chinese (68%) buyers paid in cash, while 44% of Mexican and 42% of Columbian buyers did the same.
45% of foreign buyers who bought properties in the U.S., use it as vacation homes, rental properties, or both, which is 5% lower than last year.
49% of Canadian buyers were most likely buy a home for vacation use, while 66% of Indian buyers would likely purchase a home as their primary residence.
Meanwhile, Mexican, Chinese, and Columbian buyers were more likely to buy a home for students.
While this study represents transactions from April 2023 to March 2024, right now, the metro Phoenix housing market is balanced — something that hasn’t happened since 2014, according to The Cromford Report.
The median home price in metro Phoenix in August of 2024 was $445,000, up from $438,000 in August 2023, according to the report.
