Scrutiny over purchases of U.S. real estate by wealthy Russians is growing in the wake of the war in Ukraine. But these deals represent a drop in the bucket in the scheme of the nation’s housing market.
A new analysis from the National Association of Realtors examined the home-buying behavior of Russian-born buyers in an effort to reveal the potential scope of the impact that the European conflict may have on the U.S. housing market.
Altogether, Russian buyers accounted for just 0.8% of all foreign buyers who purchased U.S. residential property between April 2015 and March 2021. During that time, total purchases by foreign-born buyers accounted for just 1.8% of total existing-home sales. A little over half of the Russian purchases were all-cash deals, compared to 27% of overall transactions in January.
Florida was the most popular destination for Russian-born buyers, representing 29% of these deals. Georgia was next at 16%, followed by New York at 13%. But as the report notes, even within Florida these transactions represent a mere fraction of overall home purchases. Only 0.2% of the home sold in Florida between July 2020 and June 2021 were bought by Russian-born individuals.
“‘Russians living abroad may have difficulty making payments on their condo fees, but the overall impact on the condominium market will be small given the small share of Russian buyers to the housing market.’”
In many ways, Russian buyers mirrored their counterparts who hail from other countries. Only 41% of these buyers live abroad — the rest are U.S. residents who were looking for a home to live in.
One notable difference between Russian buyers and their other international peers is that Russians tended to prefer condos. Around 26% of Russian nationals bought condos, compared with 17% of real-estate deals involving foreign buyers overall.
This fact points to one of the main effects the housing market could see from the Russia-Ukraine crisis.
“Foreign buyers who live abroad tend to purchase condos, based on the characteristics of all foreign buyers,” Scholastica Gay Cororaton, research economist for the National Association of Realtors, wrote in the report.
“So, Russians living abroad may have difficulty making payments on their condo fees, but the overall impact on the condominium market will be small given the small share of Russian buyers to the housing market,” she added.
For that same reason, the effects of any seizures of Russian-held real estate may be limited. U.S. officials have signaled they may look to seize assets owned by Russian elites in response to Russia’s invasion, with President Joe Biden noting in his State of the Union address that the U.S. government was going after their “ill-begotten gains.”