WASHINGTON (June 11, 2012) – Due to low prices and the relative weakness of the
dollar, international buyers continue to identify the U.S. as a desirable place
to own property and make a profitable investment.
According to the
total residential international sales in the U.S. for the past year ending March
2012 equaled $82.5 billion, up from $66.4 billion in 2011. Total international
sales were evenly split between non-resident foreigners and recent
immigrants.
The survey asked Realtors® to report their international
business activity within the U.S. for the 12 months ending March
2012.
“Today’s advantageous market conditions have drawn more and more
foreign buyers to the U.S. in recent years, signaling how desirable and
profitable owning property in this country can be,” said NAR President Moe
Veissi, broker-owner of Veissi & Associates Inc. in Miami and 2002 president
of Florida Realtors®. “Low housing prices, a good inventory condition and
increased buying power with today’s exchange rates help attract international
clients.
“Foreign buyers also have the advantage of working with a
Realtor. Realtors who specialize in serving international clientele have a truly
global perspective; they know what hurdles foreign buyers face when purchasing
property in the U.S., and have the expertise and knowledge that comes from
working with clients from different cultures and real estate
practices.”
International buyers bought homes throughout the country, but
four states accounted for 51 percent of the purchases – Florida, California,
Texas and Arizona. Florida has been the fastest growing destination of choice,
accounting for 26 percent of foreign purchases. California was second with 11
percent and Texas and Arizona accounted for seven percent.
Proximity to
the home country, the presence of relatives and friends, the convenience of air
transportation, and climate and location are all important considerations to
prospective foreign buyers. Locations on the East Coast generally attract
European buyers, while Asian buyers tend to purchase on the West Coast,
particularly California.
Florida attracts a diverse set of international
buyers including South Americans, Europeans and Canadians.
Meanwhile,
Texas remains popular among Mexican buyers. Within markets in an individual
state, it is not unusual to find concentrations of people grouped by
nationality.
“Foreign buyers recognize that owning a home in the U.S. has
many benefits, both financial and social,” said Veissi. “Many purchase property
as an investment, vacation home or to diversify their portfolio. In addition,
many recent immigrants view homeownership as an important accomplishment. They
believe that being a homeowner is one of many ways they become established in
the U.S. and attain stability, security and a sense of
community.”
International buyers came from all over the globe, but
Canada, China (The People’s Republic of China including Hong Kong), Mexico,
India and the United Kingdom accounted for 55 percent of all international
transactions, according to the survey. Canada and China remain the
fastest-growing home countries. Canada accounted for 24 percent of international
sales while China accounted for 11 percent, up from nine percent in 2011. Mexico
was third with eight percent of sales and India and the U.K. both accounted for
six percent.
Forty-five percent of international purchases were under
$250,000. In addition, there appears to be a gradual increasing trend toward
purchases in the $250,000 to $500,000 price range. In 2012, this range accounted
for 30 percent of purchases, up from 28 percent in 2011. The average price paid
by an international buyer was $400,000 compared to the overall U.S. average of
$212,000.
Several reasons account for why the average international home
price is higher than the average overall price. The international client is
typically wealthier than the domestic buyer and is looking for a property in a
specialized niche, for example, a larger property suitable for
multi-generational living or a property that establishes the individual’s
presence and standing in the community.
Many homes purchased by foreign
buyers are used as a primary residence. Vacation and rental use are also major
reasons for a purchase. More than half – 66 percent – of survey respondents
reported international buyers purchased detached single-family homes. About half
of international buyers, 52 percent, preferred to buy in a suburban area and
about a quarter, 23 percent, bought in a central city/urban
area.
Sixty-two percent of international purchases were all cash, which
has increased since 2007. International buyers still experience many financing
challenges when purchasing a home in the U.S.
In fact, among transactions
that failed, Realtors reported that in 26 percent of the cases financing issues
were the problem. The difficulties facing foreign buyers in trying to obtain a
mortgage include lack of U.S.-based credit history and hurdles in meeting
mortgage requirements. Other reasons for not purchasing properties were
cost/taxes/insurance and immigration laws.
Twenty-seven percent of
Realtors reported having worked with international clients this year. Fifty-two
percent of Realtors reported that international transactions accounted for one
to 10 percent of their total transactions, while 27 percent reported that they
made up more than 10 percent of total transactions. Realtor specialization on
the buyer’s side of the market – such as foreign language capabilities, cultural
affinity or orientation with the prospective purchaser and experience in
explaining the U.S. real estate – appear to be important in working with foreign
buyers.
© 2012 Florida Realtors®
