Foreigners snapping up US homes
International buyers are increasingly attracted to US real estate due to the strength of the dollar, the value and desirability of property and the emerging economic recovery, according to a new report.
More than a quarter of real estate agents said they have dealt with at least one foreign buyer in the last year, the 2010 Profile of International Home Buying Activity from the National Association of Realtors shows.
The number is up from 23% in the previous year’s survey. It also shows that 18% of real estate agents completed at least one sale to a foreign buyer, up from 12%.
‘The US 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 US. With expertise, knowledge and experience, Realtors have a global perspective,’ said NAR President Vicki Cox Golder.
‘A large majority of Realtors report the changes in value to the US dollar have had a strong impact on the international real estate business. In addition, perceptions abroad about trends in the US real estate market have led many international clients to believe purchasing a home in the US is more affordable than in their country and holds more value,’ she added.
International buyers came from 53 different countries around the world. The top four countries were Canada, Mexico, the UK and China/Hong Kong. The report shows that with 23% of international buyers coming from Canada, the country has remained the largest buying group in the past three years.
It also shows that foreign buyers from Mexico have been steadily increasing. In 2010 Mexico replaced the UK as the second largest buying group with 10% of buyers. Buyers from the UK decreased from 10.5% in 2009 to 9% in 2010 while 8% of buyers came from China/Hong Kong.
The two most important factors for international buyers are proximity to their home country and the convenience of air transportation. Florida typically attracts European, Canadian and South American buyers while the East Coast draws Europeans. The West Coast brings Asian buyers and the Southwest attracts Mexicans.
International buyers were reported in 39 states in 2010, but a slight majority of the total buyers are concentrated in Florida, California, Arizona and Texas. These four states account for 53% of purchases and have remained the top destinations for the past three years.
The median price paid by international buyers for a home in the US was $219,400, a decrease from 2009’s median price of $247,100. However, the median price paid by foreign buyers was significantly higher than the overall median market price, which was $172,500 in 2009.
On average, foreign buyers tend to purchase closer to the upper end of the market with 16% buying homes priced at more than $500,000. According to Realtors, this was because international buyers are typically looking for a second home.
The majority, 66%, bought single family detached homes. However, more international buyers purchased a condo than did their US counterparts, at 23% and 7%, respectively. And only 44% of international buyers used a mortgage to pay for their home, compared to 92 percent of domestic buyers.
Some 55% of foreign buyers paid in cash and this is often because of the difficulty in establishing international credit in the US.