Despite tightened credit for many domestic buyers, the United States is still a top spot for foreign purchases. The National Association of Realtors reports that “international purchases surged by $16 billion this year, one of the highest increases in recent years.”
“The U.S. has always been a desirable place to own property and a profitable investment,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “In recent years we have seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory. In addition to the advantageous market conditions, Realtors in this country have a global perspective and experience in working with clients from different cultures and real estate practices, helping them bring value to their international clients.”
Why the draw to U.S. properties? In general, homes here are less expensive than foreign comps, the government and economy have historically seen stability and good levels of security, and today homes are more affordable than ever.
Domestic investors are getting in on the action as well. Depreciating prices and distressed properties have been a draw for all-cash purchasers, which now make up about one-third of all sales.
Sixty-two percent of international purchases were all cash. According to the NAR, “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.”
“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.”
In the recent National Association of Realtors®’ 2011 Profile of International Home Buying Activity survey, Realtors have noticed new factors influencing foreign purchases. Both foreign executives working in the U.S. temporarily and international students have shown a preference for buying over renting. 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®.
Where are these international buyers coming from? Canada was in first place for the fourth year in a row. China came in second, with 9 percent of total international sales.
And while foreign buyers mostly purchased in areas close to home, close to air transportation, and in favorable climates and location, nearly every state had at least one international transaction in 2010. Leading the pack was Florida with 31 percent, California at 12 percent, Texas with nine, and Arizona, with 6 percent of total international transactions.