In the ever changing real estate marketing, we have seen foreign interest in the U.S. market rise and drop. As detailed in the article below by the National Association of Realtors, foreign purchases are down compared to one year ago but Canadians are still the number one foreign buyer in the U.S. Among the reasons that cross-border purchases are down, are the strict guidelines by banks in the U.S. for foreign buyers. This is why it is important to sit with your Canadian Financial Planner or Advisor to discuss other financing options such as refinancing your Canadian real estate, which would allow you to pay cash for your real estate in the U.S. (as they say “cash is king!”), among other possible solutions. To see more information regarding why foreign purchases are down, I encourage you to read the article below.
NAR: Foreign buyers see U.S. as profitable investment
NATIONAL ASSOCIATION OF REALTORS
WASHINGTON, JUNE 24, 2013
International home sales in the U.S. declined in the past year, but are at their second highest level in recent years and over six percent of total existing-home sales in value. According to the National Association of Realtors® 2013 Profile of International Home Buying Activity, interest in U.S. properties continues to grow, signaling that America continues to be regarded by international buyers as a great place to own property.
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,” says 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.
Twenty-seven percent of Realtors said they worked with international clients this year. The most important factors influencing their purchases were the U.S.’s desirable location and the investment potential of the real estate market.
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.
“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,” says 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.”
Five states made up 61 percent of reported purchases: Florida (23 percent), California (17 percent), Arizona (9 percent), Texas (9 percent) and New York (3 percent).
About half of foreign buyers preferred to purchase in a suburban area, while a quarter preferred a more central city/urban area. A majority purchased a detached single-family home and 63 percent used all-cash.
Based on the reported international transactions, the mean and median prices of purchases were higher when compared to purchase prices of domestic buyers. For the 12 months ending March 2013 the median international home price was $275,862, and for domestic buyers it was $179,867.
The types of homes purchased by international buyers frequently tended to be different from the types of homes purchased by domestic U.S. buyers. International buyers are more likely to be substantially wealthier and looking for a property in a specialized niche.
Foreign Buyers see U.S. as Profitable Investment
June 25, 2013 | All