The high-end housing market has done quite well throughout the last 18 months of the pandemic. Now that the vaccines are being widely proliferated and international travel is resuming, this trend is likely to receive a further boost from the influx of international buyers.
The effects of the COVID-19 pandemic and lockdowns varied significantly at different income levels. Higher earners were able to make the transition to remote work much more easily, and many decided to invest the money they would have spent on restaurants and vacations into real estate.
According to Coldwell Banker, as of May 2021 the number of home sales priced greater than $1 million had risen 224.5% compared to the previous year. This has contributed to a huge expansion of net worth as well.
Most of these ultra-high end zip codes are naturally concentrated in California and New York City. But the Midwest has also seen rising costs. The most recent data from St. Louis Realtors Association shows that the median home sales price rose to $265,000 in September, up 8.2% from the previous year. Comparing the current price to pre-pandemic numbers puts it in even sharper perspective. In September 2019, the median home price was $205,000.
This incredibly high level of activity was also occurring with one major class of buyers largely removed from the picture, namely international buyers. With travel greatly restricted for much of the last two years, there has been a drop in foreign nationals purchasing homes or investing in the U.S. real estate market. According to the NAR, between April 2020 and March 2021 the number of existing home sales by international buyers dropped sharply by 27%. There were $54.4 billion in such sales in that period.
Now that international travel to the United States is set to reopen, there is a lot of pent-up demand. Economists anticipate a flurry of high-end home purchases by international buyers in the coming months.