Historically, foreign buyers have been attracted to property ownership in the U.S. for a number of reasons. U.S. homes are generally less expensive than comparable foreign properties, homes in this country are viewed as a secure investment, and the U.S. market offers rental opportunities and long-term appreciation potential.
More recently, realtors have noticed new factors motivating foreign buyers. Many U.S. colleges and universities have a significant number of international students, and some foreign families are purchasing U.S. properties in college areas so their child has a place to live. Another source of international demand stems from foreign executives temporarily working in the U.S., some of whom prefer to purchase a residence instead of renting.
“Besides the strength of the dollar and the general economic trends in the U.S., international buyers are also recognizing the benefits of home ownership in this country, especially in the case of recent immigrants,” said Phipps. “Many foreigners perceive owning a home here as an important accomplishment in their efforts to become established in this country.”
Recent international buyers came from 70 different countries, up from 53 countries in 2010. For the fourth consecutive year, Canada was the top country of origin, with 23 percent of sales to foreigners. China was the second most popular country of origin, with nine percent of international sales this year. Tied for third were Mexico, the U.K., and India. Argentina and Brazil combined reported an increase in foreign sales with five percent, up from two percent in 2010. The top five countries of origin accounted for 53 percent of international transactions in 2011.
The average price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000. However, 45 percent of international purchases were under $200,000. This price segment has grown significantly over the years, most likely due to overall price declines in the U.S. as well as the strengthening of some foreign currencies.
Barbara Lamar of Miami-based One Sotheby’s International Realty said, “Besides buying U.S. properties at discounted prices, many foreign buyers are also enjoying favorable exchange rates relative to the U.S. dollar. Effectively, this is giving them a double-discount on their real estate purchase.”
NAR further reports that foreign buyers are primarily interested in three factors when deciding where to buy in the U.S.: proximity to their home country, convenience of air transportation, climate and location. Generally, the East Coast attracts European buyers. The West Coast remains popular for Asian purchasers. Mexican buyers are traditionally attracted to the Southwestern markets. Florida is most popular among Latin Americans, Europeans and Canadians.
Similar to last year, 28 percent of realtors in 2011 reported working with an international client. Fifty-five percent served at least one foreign client, while the bulk of international transactions were handled by a small percentage of realtors. Only eight percent of members obtained 50 percent or more of their transactions from international clients.
Sixty-one percent of foreign buyers purchased a single-family home while 36 percent bought a condo/apartment or townhouse. In addition, 62 percent of international purchases were reported as being all cash. This percentage is significantly higher than all-cash purchases for domestic buyers, mostly due to the differences in international credit reporting standards. Financing challenges continue to be a major hurdle for international buyers, with 32 percent reporting these as their reason for not buying a home. Many realtors reported that their foreign clients faced mortgage financing issues, as well as problems with legal, tax and immigration laws.
According to Michael Butler of Kissimmee-based Midlan International, there are two categories of international buyers in Central Florida: foreign corporations who are taking advantage of the low prices to acquire large blocks of existing inventory to market in other countries, and individuals who visit Central Florida on vacation and end up buying in ever increasing numbers.