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 National Association of Realtors® 2012 Profile of International Home Buying Activity,
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®
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