International
customers accounted for about $66 billion or seven percent of residential real
estate purchases in the U.S. during the calendar year ending March 31. These figures were released Wednesday by The
National Association of Realtors® (NAR) in its 2010 Profile of International
Home Buying Activity.
NAR surveyed
realtors and found that 28 percent of its members who responded have worked
with at least one international client during that period. This is up from 23 percent who reported such
associations in the 2009 survey. 18
percent of respondents indicated they had completed at least one sale with a
foreign client, up from 12 percent a year ago.
These sales are not concentrated; only 1 percent of Realtors reported
that they obtained 75 percent or more of their sales from this market segment
and 3 percent reported it as the source of 51 to 75 percent.
NAR said
that several factors contributed to foreign interest in the U.S. market including
the strength of the dollar and the recovering economy. Association President Vicki Cox Golder said
"Perceptions abroad about trends in the U.S. real estate market have led
many international clients to believe purchasing a home in the U.S. is more
affordable than in their country and holds more value."
The
survey asked Realtors to speak about their experiences with two types of
international clients;
- Type
A: Foreign clients with permanent
residences outside the U.S. but interested in purchasing U.S. property. This group accounted for $41 billion or 4
percent of the residential market;
- Type
B: Clients who are recent immigrants or
temporary visa holders in the U.S. and looking for a primary residence. These customers were responsible for about 3
percent or $26 billion in sales.
NAR
found that international buyers came from 53 different countries. As was the case for the previous two years,
Canadians were the most active buyers with 23 percent of the total. Buyers from
Mexico were second, up from third, with 10 percent of buyers, while the U.K.
was dropped to third with 10 percent. Eight percent came from China/Hong King. Other countries that provided significant
numbers of buyers were Germany/France, India, Russia, and Argentina/Brazil.
Realtors in 39 states said they
had worked with international buyers during the survey period but 53 percent of
the buyers were reported in Florida, California, Arizona, and Texas which were
also the top destinations for the past three years
Where international buyers
purchase property appears to be determined by the proximity to their home
country and the availability of convenient air transportation. Florida draws Europeans, Canadians, and South
Americans; Europeans prefer the East Coast while the West Coast attracts
Asians. Mexicans are active purchasers in
the Southwestern states. Word of mouth
appears to also be a factor as concentrations of nationalities are found to be
purchasing in certain markets.
Buyers find their agents overwhelmingly
through networking. 19 percent were
referred by friends, 34 percent found their agents through previous contacts or
clients. A combination of yard signs,
walk-ins, and the Internet accounted for 31 percent of customers. Agents who
did significant international business tended to have specialized skills
including strong language capabilities, cultural knowledge, and expertise in
solving some of the problems that come along with foreign purchases.
Homes were intended as
primary residences in 50 percent of the sales while 22 percent of sales were
for vacation homes for family and friends. The remaining 28 percent was split evenly
between purchases for rental investment and or a combination of vacation and
investment.
International buyers paid a
median price of $219,000 for their homes, down from $247,100 in 2009. This was well above the median market price
which was $172,500 in 2009. 16 percent of the purchases were for homes
priced over $500,000 and 7 percent for homes over $1 million. Single family
detached homes were purchased by 66 percent of the buyers, but they also
purchased condos in higher numbers, 223 percent to 7 percent, than the U.S.
market in general. The median price for
a home intended as a primary residence was $240,000 while it was only $186,100
for homes purchased for other purposes.
The
majority (55 percent) of international buyers paid cash for their houses, but
buyers seeking financing encountered significant hurdles. In fact, respondents reported that 34 percent
of their customers were unable to complete a purchase because of financing
problems. The lack of a Social Security
number appears to be a major reason for credit difficulties. Realtors reported that, even when financing
was finally obtained, there were often significant delays.
Are any lenders buying these loans?