They Come to America…To Buy Real Estate
As the saying goes, “all real estate is local,” but that’s not necessarily true for real estate owners, who continue to come from across the globe to purchase U.S. property. According to the National Association of Realtors®’ 2012 Profile of International Home Buying Activity, international purchases within the U.S. increased over the past year, as real estate in this country remains very attractive to foreign buyers.
Total residential international sales in the U.S. for the past year ending March 2012 equaled $82.4 billion in 2012, up from $66.4 billion in 2011. Total international sales were split evenly between non-resident foreigners and recent immigrants.
“With low prices and the strength of the dollar, foreign buyers recognize our country’s advantageous market conditions,” said Joanne Zettl, Chair-elect of the Cleveland Area Board of REALTORS® (CABOR). “Foreign buyers understand the value of owning a home in the U.S. and can rely on a Realtor® to help guide them through the often complex buying process. International clients also know homeownership has many benefits, both financial and social. Realtors® have noticed that many recent immigrants view owning a home as an important accomplishment that brings stability, security and a sense of community.”
According to the report, international buyers came from all over the globe, but Canada, China (People’s Republic of China including Hong Kong), Mexico, India and the United Kingdom accounted for 55 percent of all foreign transactions. Canada and China remain the fastest-growing countries in terms of U.S. property purchases. Foreign buyers purchased homes throughout the country, but four states – Florida, California, Texas and Arizona – contained 51 percent of the homes purchased. Florida has been the fastest growing destination of choice, accounting for 26 percent of foreign purchases.
Many homes purchased by foreign buyers are used as a primary residence. Vacation and rental use are also major reasons for purchase. Forty-five percent of international purchases were under $250,000. More than half, 62 percent, were paid for in cash, which has increased since 2007. Meanwhile, international buyers still experience many financing challenges when purchasing a home in the U.S. Among transactions that failed, Realtors® reported that in 26 percent of the cases, financing issues were the problem.
NAR offers a Certified International Property Specialist (CIPS®) designation, which prepares Realtors® to service the growing international market in their local community by focusing on culture, exchange rates, investment trends, and legal issues.
“The difficulties foreign buyers face in trying to obtain a mortgage include lack of U.S.-based credit history and hurdles in meeting mortgage requirements,” said Zettl. “Realtors® who specialize in serving international clientele understand the obstacles for foreign buyers in the U.S. That’s why buyers who work with a Realtor® who has earned the CIPS® designation are making a smart move. With expertise, knowledge and experience of working with clients from different cultures and real estate practices, these Realtors® truly have a global perspective.”
Twenty-seven percent of Realtors® reported having worked with international clients in the past year. Fifty-two percent of Realtors® reported that international transactions accounted for one to 10 percent of their total transactions, while 27 percent reported that they made up more than 10 percent of total transactions.