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 $82.4 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, Fla. “Low housing prices, a good inventory condition and increased buying power with today’s exchange rates help attract international clients. 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 fifty-one percent of the purchases – Florida, California, Texas and Arizona. Florida has been the fastest growing destination of choice, accounting for twenty-six percent of foreign purchases. California was second with eleven 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.”
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 thirty percent of purchases, up from twenty-eight percent in 2011. The average price paid by an international buyer was $400,000 compared to the overall U.S. average of $212,000.
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 – sixty-six percent – of survey respondents reported international buyers purchased detached single-family homes. About half of international buyers, fifty-two percent, preferred to buy in a suburban area and about a quarter, twenty-three 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 twenty-six 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 ten percent of their total transactions, while twenty-seven percent reported that they made up more than ten 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.
NAR helps Realtors expand their businesses globally. The Certified International Property Specialist designation prepares Realtors to service the growing international market in their local community by focusing on culture, exchange rates, investment trends, and legal issues. The CIPS Global Network is comprised of over 2,000 Realtors worldwide.
NAR sees low housing prices attracting international buyers
June 14, 2012