International Buyers of US Real Estate On The Rise
Prior to the ongoing real estate crisis, the U.S. stock market was the primary investment vehicle for foreign investors. But thanks to record foreclosures, international buyers are increasingly attracted to American real estate. Several factors such as the economic recession, weakness of the dollar and the bountiful availability of real estate in choice markets are contributing to this phenomenon. Most foreign buyers believe purchasing a home in the U.S. is more affordable than in their home countries.
A survey conducted by NAR estimates that between April 1 2009 and March 31, 2010, $66 billion worth of residential properties, which is about seven percent of the residential market, were bought by foreign buyers, including those with residency outside the U.S. and workers with temporary visas.
Buyers from Canada, Mexico, the U.K. and China were the top 4 of the 55 countries. In 2010, foreign buyers purchased properties in 39 states. However, slightly over fifty three percent of the buyers are concentrated in Florida, California, Arizona and Texas. Florida and California have been the top two destinations since the past three years.
International buyers seem to have specific geographic preferences. Florida typically attracts Canadian, European and South American buyers while the Europeans prefer the East Coast. The West Coast has been the favorite location for Asian buyers for many years and the Mexicans are drawn to the Southwest.
$247,100 was the median price paid by foreign buyers. For most buyers, the U.S. purchase was either an investment property or a second home. Sixty six percent purchased single family detached homes. International buyers purchased more condos than Americans and Florida was their top preference. Sixteen percent of the total international buyers purchased homes valued over S500,000. Interestingly, fifty five percent of international buyers bought properties by paying cash.
With the U.S. housing market continuing to be in a depressed state, 2011 will likely see more foreign buyers than 2010, especially from countries where the currency is stronger than the dollar. This could be the silver lining for America’s real estate industry in an otherwise gloomy outlook.