Market for International Real Estate Services
Some of the components of demand for international real estate services include the following: relocations into and out of the U.S. by both domestic and foreign transnational companies; U.S. retiree purchases overseas; immigrant home purchase inflows into the U.S.; immigrant purchases of commercial or business properties in the U.S.; foreign investor purchases of U.S. real estate; and U.S. investor purchases of foreign real estate.
Inbound Movements: Foreign direct investment (FDI) in the U.S. increased 8.5% from 2003 to 2004 to $1.53 trillion. FDI position in U.S. real estate rose 4.7% from 2004 to $37.9 billion. FDI in U.S. real estate accounts for 2.5% of total foreign investment in the U.S. market, with significant anecdotal evidence projecting a higher level of foreign participation in 2005.
Outbound: Statistics from the Association of Americans Resident Overseas indicate that excluding Military personnel, over 4 million Americans live in over 150 countries overseas. Besides corporate employees, other major components of this group included educators, students and retired persons. A major international consulting firm estimates that this translates into approximately 200,000 corporate relocation housing orders annually.
Immigration - Residential: Foreign immigration into the U.S. in the 1990s was the highest since the wave of Eastern European immigration at the end of the 19th century. Over 18 million immigrants arrived since 1990, contributing almost 50 percent of the overall U.S. population increase.
Foreign-born purchases of residential real estate are expected to rise steadily from the significant increase in immigration. Nearly half of the recent increase in the overall U.S. population is due to newly arrived immigrants. Given the strong relationship between rising homeownership rates and the length of time in the U.S., home purchases by immigrants will have a sizable impact on the housing market for the foreseeable future.
The homeownership rate rises rapidly the longer an immigrant remains in the U.S. The homeownership rate is about 18% for immigrants who came to the country in the last five years; but is 78% among those who arrived more than 30 years ago. NAR estimates that more than half of all first-time homebuyers will be of minority households (Hispanics, blacks, Asians) in the next ten years. In fact, nearly 300 million immigrants are expected to reach U.S. shores between 1999 and 2100. These immigrants represent a staggering long-term business opportunity for REALTORS® both in the U.S. and--through referral fees--for practitioners abroad.
Demand for international brokerage services: Recent research indicates that foreign purchases of U.S. real estate in 1999 were on the order of $862.7 million, while U.S. purchases overseas were more than $652.4 million. Cumulatively, U.S. investments overseas amount to more than a trillion dollars, and foreigners have invested nearly a trillion dollars in the United States. A significant portion of each of those numbers - no one knows for sure just how significant but an educated guess might be 15 percent - is real estate investment.
International Real Estate is not just a niche industry, but is integrated into all sectors of the real estate business and is a significant means for growing your business. NAR International seeks to render the global market accessible to and profitable for REALTORS®, and offers a wide variety of programs and services to help REALTORS® succeed in the international arena within your local market. Read More