A recent report released by the National Association of REALTORS® indicates that interest in property in the United States has increased among home buyers around the world. Entitled the 2010 Profile of International Home Buying Activity, the report lists several factors as contributing to this growing interest. Some of these factors include:
- The strength of the U.S. dollar
- The overall value and level of desirability of real estate in the United States
- The apparent emergence of an economic recovery
“While all real estate in the U.S. is local, the same is not true for property owners,” said Vicki Cox Golder, who is the President of the NAR as well as the owner of Vicki L. Cox Real Estate in Tucson, Arizona, in a REALTOR®Mag article. “The. U.S. continues to be a top destination for international buyers from all over the world. Foreign buyers understand the value of owning a home in this country and can rely on REALTORS® to help guide them through the complex process of buying property in the U.S. With expertise, knowledge and experience, REALTORS® have a global perspective.”
The survey analyses investor interest from April 1, 2009 through March 31, 2010, during which time foreign investors purchased an estimated $66 billion worth of residential property in the United States, representing 7% of the residential market. Those included in the “foreign investors” category include those who remain residents outside of the United States as well as recent immigrants and temporary visa holders. Furthermore, 28% of REALTORS® report having worked with at least one international client over the past year, representing a significant increase from the 23% reporting to do the same in the June report. Furthermore, the report estimates that 18% of REALTORS® completed at least one sale with a foreign buyer, compared to 12% last year.
“Several factors have contributed to an increase in international buyer interest in the U.S.,” continued Golder. “A larger majority of REALTORS® report the changes in value of the U.S. dollar have had a strong impact on the international real estate business. In addition, perceptions abroad about trends in the U.S. real estate market have led many international clients to believe purchasing a home in the U.S. is more affordable than in their country and holds more value.”
Although international buyers during the period analyzed came from 53 different countries, Canada, the U.K., Mexico and China/Hong Kong were the top four investors. In fact, 23% of foreign investors came from Canada, which has been the largest foreign investor over the past three years. Mexican investors have been on the rise, however, having replaced the U.K. as the second largest group of buyers in 2010 and holding 10% of the market. While buyers from the U.K. dropped from representing 10.5% to 9% of the market, its investors still held a strong showing. Investors from China/Hong Kong, on the other hand, represented 8% of the foreign investment market.
According to the report, there were two factors that were particularly important to international buyers who were interested in purchasing property in the United States. One factor was the proximity of the property to their home country, while the other was the convenience of air transportation. In general, Canadians, South Americans and Europeans were interested in Florida, while Europeans showed interest in the East Coast. Asian buyers were most interested in the West Coast, while Mexican buyers were primarily interested in the Southwest. While international buyers expressed interest in a total of 39 different states in 2010, the majority of interest was expressed in Arizona, California, Florida and Texas. In fact, 53% of foreign purchases took place in these states, with California and Florida being the top two destinations.
While the median price paid by foreign buyers dropped from $247,100 to $219,400, these figures are still much higher than the overall median price within the market. In fact, foreign buyers tended to purchase at the higher end of the market, with 16% of purchases being properties priced at $500,000 or more. Furthermore, while 66% of foreign investors did purchase single-family detached homes, 23% purchased condos compared to 7% of domestic buyers. Similarly, only 44% of international buyers purchased their homes with a mortgage, compared to 92% of American buyers. REALTORS® reports that the majority of foreign buyers choose to pay with cash due to the difficulties associated with establishing international credit in the states. This is illustrated by the fact that 34% of potential foreign buyers were unable to complete their purchases because they were unable to obtain the financing they needed in the United States.
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Great post reflecting the current situation regarding foreign buyers. I myself have come across a few foreign buyers who had up to 50% to put down on a property and still could not get qualified for traditional financing. They have really secured the hitch on international credit.
I work primarily with investors and clients that want to own Winter getaway homes. I have a HUGE Canadian clientele and about 40% of my web traffic comes from Canadian consumers.
I’ve heard conflicting reports about the U.S. housing market. First, the national Home Price Index rose in April. Then in June the Mortgage Banker’s Association’s survey showed an increase in Refinance applications. This is actually the first I’ve heard about an increase in international interest in investment properties.
Great post. While reading i was thinking exactly what you said in the last 2 sentences. I’m finding it harder to get international buyers approved traditionally as the banks have really tightened up on loans for international buyers. Therefore i see a lot of individuals paying cash for homes. Thanks for sharing this info!
With that interest shows by international investors in the U.S. real estate simply means that things are eventually looking up better for the industry. Nice post anyway.
Foreign investors are taking advantage of the foreclosures and shortsales available now. Cash is king though – loans are still difficult. Las Vegas is seeing an influx of buyers for condos and slowly recovering.