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?
