Home purchasing

Oligarchs prefer luxury apartments in New York, but this is where most Russian-born buyers would prefer to reside

The scrutiny of US real estate purchases by wealthy Russians is intensifying amid the war in Ukraine. But these deals represent a drop in the bucket in the grand scheme of the nation’s housing market.

A new analysis from the National Association of Realtors has examined the home buying behavior of Russian-born buyers in a bid to reveal the potential extent of the impact the European dispute could have on the US housing market.

In total, Russians made up just 0.8% of all foreign buyers who purchased residential property in the United States between April 2015 and March 2021. During this period, total purchases by foreign-born buyers accounted for only than 1.8% of total existing home sales. Just over half of Russian purchases were made entirely in cash, compared to 27% of all transactions in January.

Florida was the most popular destination for Russian-born buyers, accounting for 29% of those transactions. Georgia followed with 16%, followed by New York with 13%. But, as the report notes, even in Florida these transactions represent only a fraction of all home purchases. Only 0.2% of homes sold in Florida between July 2020 and June 2021 were to Russian-born buyers.

“Russians living abroad may have difficulty paying their condo fees, but the overall impact on the condo market will be small given the low share of Russian buyers in the housing market.”

— Scholastica Gay Cororaton, National Association of Realtors

In many ways, Russian buyers mirrored their counterparts from other countries. Only 41% of those buyers currently live overseas – the rest are US residents who were looking for a home to live in.

A notable difference between Russian buyers and their international peers is that Russians tend to prefer condominium purchases. About 26% of Russian nationals bought condominiums, compared to 17% of real estate transactions involving foreign buyers overall.

This fact indicates one of the main effects that the housing market could see from the Russian-Ukrainian crisis.

“Foreign buyers who live abroad tend to buy condos, based on characteristics of all foreign buyers,” Scholastica Gay Cororaton, research economist for the National Association of Realtors, wrote in the report.

“Thus, Russians living abroad may find it difficult to pay their condominium fees, but the overall impact on the condominium market will be small given the low share of Russian buyers in the housing market,” she added.

For this same reason, the effects of any seizure of real estate held by Russians may be limited. US officials have signaled they may seek to seize assets belonging to Russian elites in response to the Russian invasion, with President Joe Biden noting in his State of the Union address that the US government is lashing out to their “ill-gotten gains”.