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Frugal Homeowner®

 

 

The Number of International Buyers Nearly Double in 2010


QUESTION:  My wife and I live in a condo development and have noticed that the last three sales were to buyers from Canada and the U.K.  Are international buyers on the rise, or is what we’re seeing here just an anomaly.---FS

ANSWER:  What you’re seeing in your condo development is a growing trend in the U.S.  In fact, a survey just released from the National Association of REALTORS®, trade association for the industry, documents the increase, where buyers are coming from, as well as what they’re buying and where.

International real estate buyers are increasingly attracted to property in the U.S due in part by the value of the dollar, softened prices during the economic recovery, as well as U.S. real estate being more desirable and affordable than in many countries.   

The survey covers the period between April 1, 2009, and March 31, 2010. It’s estimated that foreign buyers, including those with residency outside the U.S. as well as recent immigrants and temporary visa holders purchased $66 billion of U.S. residential property which is equal to a 7 percent share of the residential market. This is nearly twice the $36 billion purchased during the previous 2009 survey.

Twenty-eight percent of REALTORS® worked with at least one international client, which is a significant increase from 23 percent from the 2009 report.  Eighteen percent of REALTORS® reported closing at least one sale with a foreign buyer compared to 12 percent in the last survey.

While international buyers came from 53 different countries, the top four countries by volume were Canada, 23%, Mexico, 10%, the U.K, 9%, and China/Hong Kong, 8%.   Canadians have remained the largest buying group during the past three years.  In the 2010 survey, Mexico jumped ahead of the U.K. as the second largest buying group as the number of U.K. buyers declined by 1.5 percent.    

The survey showed that it’s important to international clients to purchase U.S. real estate in proximity to their home country and the convenience of air travel.  European, Canadian, and South American buyers tend to purchase in Florida, with other destinations on the East Coast attracting Europeans.  The West Coast typically garners Asian buyers with the Southwest attracting Mexicans.  

In the 2010 international buyer survey, purchases were made in 39 states, with a slight majority of 53 percent concentrated in Florida, California, Arizona and Texas. These four states have remained the top destinations for the past three years, noting Florida and California as number one and two respectively.

When it comes to what international buyers pay for a home in the U.S., the median price was $219,400, a decrease from the last survey’s median price of $247,100.  However, the median price paid by foreign buyers was significantly higher than the overall median market price of $172,500 in 2009. With more than 16 percent of foreign buyers making purchases of more than $500,000, they tend to gravitate to the upper end of the market.  REALTORS® believe this is because many are purchasing large second homes.

Sixty-six percent of international buyers purchased single-family detached homes.  But international buyers tend to purchase a condo more often than U.S. buyers, at 23 percent compared to 7 percent respectively.  Only 44 percent of foreign buyers used a mortgage to finance their purchase, compared to 92 percent of domestic buyers. A majority of international buyers use all cash because it’s difficult to establish international credit in the United States. Over one-third of prospective foreign buyers were unable to complete a purchase due to financing problems.

The fact that international buyers are gravitating to the U.S. to purchase real estate is good news.  Not only are they helping reduce our property inventory while monetarily contributing to our economy, it’s a great way to showcase the value and desirability of owning a piece of American soil.

 



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