Foreign buyers bullish on U.S. propertiesby Marcie Geffner
Foreign homebuyers have a “substantial interest” in U.S. properties, accounting for $68.2 billion, or 6.3 percent, of total U.S. existing-home sales during the 12-month period ended March 31, 2013, according to the National Association of Realtors (NAR).
Foreign buyers whose permanent residence was outside the U.S. accounted for $34.8 billion, or 51 percent, of purchases. Immigrants who’d lived in the U.S. for less than two years and temporary visa holders who’d resided in the U.S. for more than six months accounted for $33.4 billion, or 49 percent, of the total, said the NAR’s 2013 Profile of International Home Buying Activity.
Foreign purchases have declined some
Though international buyers are important, their purchasing power has diminished. NAR attributed a $14 billion decline in total international sales from the previous year thanks to economic slowdowns in major foreign economies, tighter U.S. credit standards and currency exchange rates, among other factors.
In a NAR member survey, 27 percent of Realtors said they’d worked with international homebuyers this year. That figure held steady compared with 2012 and dropped 1 percent compared with 2010 and 2011. More than 70 percent of Realtors reported a constant or higher number of contacts from international clients during a five-year period. In total, 3,357 Realtors responded to the survey.
Bulk of buyers from 5 countries
Realtors reported purchases from 68 countries, though five countries historically have accounted for the bulk of purchases. Those countries were:
- Canada: 23 percent
- China: 12 percent
- Mexico: 8 percent
- India: 5 percent
- United Kingdom: 5 percent
Canada and China have been the fastest-growing sources of foreign buyers. Canadian buyers purchased properties with a median price of $183,000, with the majority of homes purchased in Florida, Arizona and California.
Chinese and Mexican
Chinese buyers purchased properties with a median price of $425,000 and typically in California. Sixty-two percent of Mexican buyers purchased property in California and Texas, with a median price of $156,250, NAR said.
Where are they buying?
International buyers tend to cluster in certain locations based on their countries of origin. They also look for proximity to their home country, friends and relatives, jobs, vacation spots and education opportunities as well as mild climates. Home sellers who live in locales with these features should ask their Realtor about ways to attract international buyers.
Five preferred locations made up 61 percent of reported purchases. Those locations were:
- Florida: 23 percent
- California: 17 percent
- Arizona: 9 percent
- Texas: 9 percent
- New York: 3 percent
Foreign homebuyers were interested in other states, as well. About half preferred a suburban area while one-quarter preferred a central city or urban area. A majority purchased a detached house and 63 percent paid cash for a home, NAR said.