June 28, 2013 10:28 pm
The survey, which asked REALTORS® to report their international business activity within the U.S. for the 12 months ending March 2013, showed that total international sales were $68.2 billion, down approximately $14 billion from the previous year. The decline is attributed to a number of temporary factors, including economic slowdowns in a number of major foreign economies, tighter U.S. credit standards and unfavorable exchange rates. Of total international transactions, $34.8 billion (51 percent) were attributed to foreign buyers with permanent residences outside the U.S. and $33.4 billion (49 percent) were attributed to buyers who are recent immigrants or temporary visa holders residing for more than six months in the U.S.
“Foreign buyers are experiencing hurdles not only abroad, but also here in the U.S. when it comes to purchasing property,” said NAR President Gary Thomas. Difficult economic conditions, particularly in Europe, have impacted foreign buyers, but several factors in the U.S. have also affected their purchasing power here. Tight credit standards have made financing challenging for immigrants, and low housing inventories have made finding a house difficult. However, none of these factors appear to be permanent.”
Foreign buyers continue to have a substantial interest in U.S. properties. Over a five-year timeframe, more than 70 percent of REALTORS® reported a constant or increasing level in the number of international clients contacting them.
“REALTORS® provide international buyers with a significant advantage when purchasing property in the U.S. REALTORS® who have earned NAR’s Certified International Property Specialist designation have received specialized training and are well prepared to service the international market,” said Thomas.
Twenty-seven percent of REALTORS® reported having worked with international clients this year. The most important factors influencing international clients’ purchases reported by REALTORS ® were that the U.S. is viewed as a desirable location and that the real estate market is regarded as a profitable investment.
REALTORS ® reported purchases from 68 countries, but five have historically accounted for the bulk of purchases; Canada (23 percent), China (12 percent), Mexico (8 percent), India (5 percent) and the United Kingdom (5 percent). These five countries accounted for approximately 53 percent of transactions, with Canada and China the fastest growing sources over the years.
Canadian buyers were reported to purchase properties with a median price of $183,000, with the majority purchased in Florida, Arizona and California. Chinese buyers tended to purchase property in the upper price ranges with a median price of $425,000 and typically in California. Sixty-two percent of Mexican buyers purchased property in California and Texas, with a median price of $156,250.
International buyers tend to cluster in specific locations based on countries of origin, as well as several other factors. “Many factors influence foreign buyers’ decisions on where to purchase in the U.S., but the most important are proximity to home country, presence of relatives and friends, availability of job and education opportunities, and the climate,” said Thomas. “International buyers also differ on the type of desired property. Some are looking for trophy properties while others are interested in modest vacation homes.”
Published with permission from RISMedia.