International investors are shying away from America's housing market—thanks to record housing costs and a stronger U.S. dollar.

According to the National Association of Realtors (NAR), international investors purchased 54,300 existing homes from April 2023 to March 2024, a 36% drop from a year earlier.

It was the lowest level of international investment since at least 2009, when the NAR began tracking the data.

In dollar terms, international investors purchased $42 billion worth of America's real estate over the same period—a strong 21% decline from the previous year.

“The strong U.S. dollar makes international travel cheaper for Americans but makes U.S. homes much more expensive for foreigners,” said NAR chief economist Lawrence Yun.

“Therefore, it’s not surprising to see a pullback in U.S. home sales from foreign buyers.”

Although international buyers can obtain a U.S. mortgage, the process tends to be more complicated than for Americans.

It’s harder for banks to verify work history, income, and creditworthiness because foreign buyers don’t have a U.S. credit score. Then, there are transaction costs, often with a steep currency conversion.

That being said, NAR said half of international buyers make all-cash offers, compared with 28% of the total market for existing homes. That suggests foreign buyers have deep pockets but aren’t finding sensible deals.

Like ordinary Americans, international investors are contending with near-record home prices, which have made it harder to view residential real estate as a solid investment.

The post-Covid housing market has changed

Buying a home in America today is more expensive than ever, especially for international buyers who target higher-end properties.

In 2023, the median price of an existing home purchased by international buyers was $475,000, compared to $392,600 for all existing home buyers, according to the NAR.

Meanwhile, nearly one-fifth of purchases were valued at $1 million or more.

The hottest housing markets among these buyers are in warmer states like Florida, Texas, Arizona, and California, where real estate prices are some of the most expensive in the country.

While home price growth has slowed over the past year, data from Realtor.com shows that the average price per square foot increased by 3.4% nationwide in June.

Although housing inventory levels are on the rise, “homes were still snapped up more quickly than pre-pandemic levels,” Realtor.com said.

Another price booster is a new law in Florida that enforces more stringent building safety standards and regular assessments, which often lead to expensive repairs.

Craig Studnicky, chief executive at ISG World in Miami, said older condo units often need anywhere between $50,000 and $400,000 in safety upgrades.

“Nobody wants to buy that inventory that’s 30 years or older,” he told MarketWatch. However, 9 in 10 active listings in South Florida—a popular market for international buyers—are condos built more than 30 years ago.