The 2011 Profile of International Home Buying Activity from the National Association of Realtors, shows total residential international sales in the US for the past year ending in March 2011 was $82 billion, up from $66 billion in 2010.
Total international sales were split evenly between non resident foreigners and recent immigrants, while combined total domestic and international existing home sales in the US were $1.07 trillion. ‘The US has always been a desirable place to own property and a profitable investment. In recent years we have seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory,’ said NAR President Ron Phipps.
‘In addition to the advantageous market conditions, realtors in this country have a global perspective and experience in working with clients from different cultures and real estate practices, helping them bring value to their international clients,’ he added.
Historically, foreign buyers have been attracted to property ownership in the US for a number of reasons, NAR says, including the fact that properties are generally less expensive than comparable foreign properties, they are viewed as a secure investment, and the US market offers rental opportunities and long term appreciation potential.
More recently agents have noticed new factors motivating foreign buyers. These include more foreign families buying property for their offspring studying in the US, and an increase in the number foreign executives temporarily working in the country, some of whom prefer to purchase a residence instead of renting.
Besides the strength of the dollar and the general economic trends in the US, international buyers are also recognizing the benefits of home ownership in this country, especially in the case of recent immigrants. Many foreigners perceive owning a home here as an important accomplishment in their efforts to become established in this country,’ said Phipps.
Recent international buyers came from 70 different countries, up from 53 countries in 2010. For the fourth consecutive year, Canada was the top country of origin, with 23% of sales to foreigners. China was the second most popular country, with 9% of international sales this year. Tied for third were Mexico, the UK and India. Argentina and Brazil combined, reported an increase in foreign sales with 5%, up from 2% in 2010. The top five countries of origin accounted for 53% of international transactions in 2011.
The average price paid by an international buyer was $315,000 compared to the overall US average of $218,000. However, 45% of international purchases were under $200,000. This price segment has grown significantly over the years, most likely due to overall price declines in the US as well as the strengthening of some foreign currencies, NAR said.
The four states with the heaviest concentration of international buyer activity have remained the same over the past five years. Florida had 31% of total international transactions this year, the most of any state. California had 12%, Texas 9% and Arizona 6%.
Foreign buyers are primarily interested in three factors when deciding where to buy in the US: proximity to their home country; convenience of air transportation; and climate and location.
Generally, the East Coast attracts European buyers. The West Coast remains popular for Asian purchasers. Mexican buyers are traditionally attracted to the Southwestern markets. Florida is most popular among South Americans, Europeans and Canadians.
Some 61% of foreign buyers bought a single family home while 36% bought a condo/apartment or townhouse. In addition, 62% of international purchases were reported as cash, significantly higher than all cash purchases for domestic buyers, mostly due to the differences in international credit reporting standards.
Financing challenges continue to be a major hurdle for international buyers, with 32% reporting these as their reason for not buying a home. Many Realtors reported that their foreign clients faced mortgage financing issues, as well as problems with legal, tax and immigration laws.