The struggling U.S. economy has long been attracting foreign property buyers to the new low-hanging fruit on the market, and a new study shows that interest is still strong and may even be growing. The National Association of Realtors pin the attraction on low prices and current weakness in the dollar, which has helped boost international sales to $82.5 billion in the year ending in March 2012, up from $66.4 billion the previous year. Savvy buyers have access to international real estate agents who know how to navigate the barriers to entry, and states like Florida, California, Texas and Arizona are seeing a large influx of buyers. For more on this continue reading the following article from Property Wire.
Due to low prices and the relative weakness of the dollar, international buyers continue to identify the United States as a desirable place to own property and make a profitable investment, according to the National Association of Realtors.
Its latest report shows that total residential international sales in the US for the 12 months ending in March 2012 was $82.5 billion, up from $66.4 billion in 2011. Total international sales were evenly split between non-resident foreigners and recent immigrants.
‘Today’s advantageous market conditions have drawn more and more foreign buyers to the U.S. in recent years, signalling how desirable and profitable owning property in this country can be,’ said NAR president Moe Veissi.
‘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 real estate agent who specializes in serving international clientele and have a truly global perspective,’ he explained.
‘They know what hurdles foreign buyers face when purchasing property in the US, and have the expertise and knowledge that comes from working with clients from different cultures and real estate practices,’ he added.
International buyers bought homes throughout the country but just four states, Florida, California, Texas and Arizona, accounted for 51% of the purchases. Florida has been the fastest growing destination of choice, accounting for 26% of foreign purchases. California was second with 11% and Texas and Arizona accounted for 7%.
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. Many purchase property as an investment, vacation home, or to diversify their portfolio. In addition, many recent immigrants view home ownership as an important accomplishment. They believe that being a homeowner is one of many ways they become established in the US and attain stability, security, and a sense of community,’ said Veissi.
International buyers came from all over the globe, but Canada, China including Hong Kong, Mexico, India, and the United Kingdom accounted for 55% of all international transactions, according to the survey.
Canada and China remain the fastest growing countries. Canada accounted for 24% of international sales while China accounted for 11%, up from 9% in 2011. Mexico was third with 8% of sales and India and the UK both accounted for 6%.
Some 45% 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% of purchases, up from 28% in 2011.
The average price paid by an international buyer was $400,000 compared to the overall US 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.
NAR also found that 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, some 66%, of survey respondents reported international buyers purchased detached single family homes. About half of international buyers, 52%, preferred to buy in a suburban area and about a quarter, 23%, bought in a central city/urban area. Some 62% of international purchases were all cash, which has increased since 2007.
International buyers still experience many financing challenges when purchasing a home in the US with agents reporting that among transactions that failed in 26% of the cases financing issues were the problem. The difficulties facing foreign buyers in trying to obtain a mortgage include lack of US based credit history and hurdles in meeting mortgage requirements. Other reasons for not purchasing properties were cost, taxes, insurance and immigration laws.
In the last 12 months some 27% of realtors said they has worked with international clients and 52% said that international transactions accounted for one to 10% of their total transactions, while 27% reported that they made up more than 10% of total transactions.
Extras such as speaking a foreign language, cultural affinity or orientation with the prospective purchaser and experience in explaining the US real estate market were identified as being attractive to foreign buyers.
This article was republished with permission from Property Wire.