Breckenridge and Summit County Colorado have been a great investment for many years now but the recent activity by buyers outside of the U.S. I believe is due to new factors we have not seen in quite some time and maybe never before. Deanna and I have seen an up-tick in inquires and purchases by foreign buyers. Most of our non-US buyers have been from the UK. However we seem to be seeing an increased interest by many other foreign nationals for property especially in resort communities such as ours in Breckenridge Colorado.
Our Dollar:
When you consider how the U.S. dollar has slid in value compared to other international currencies, you begin to understand why investors are purchasing real estate in this country. Real estate prices here are a bargain compared to many areas in Western Europe and Asia.
A recent study shows the currency environment probably played a major role in the proportion of foreign buyers who paid cash for their homes. The cash group (28 percent) was much greater than that of the general U.S. home buyer population (8 percent). In addition, international buyers who can afford a home abroad often are from wealthier households with higher monthly incomes and cash reserves. Also, the tax benefits of mortgage-interest deductions may not apply -- depending on the buyer's home country's tax code -- which lowers the incentive to take out a mortgage.
Reasons for buying real estate in the US:
Our typical international buyer purchased a single-family home or townhouse. The primary purpose in purchasing the home was as a vacation venue for family and friends.
The typical international buyer in the U.S. spends 4.2 months in his or her U.S. property. U.S. visa rules allow nonresidents (unless under a student or work visa) to remain in the country for only six months. Because foreign
buyers are nonresidents of the U.S., most of them plan to spend less than six months in their U.S. home. A small percentage -- 6 percent -- spends less than two weeks. Forty-four percent intend on using their U.S. property for one to six months. International buyers in the Ski resorts tend to spend less time than the average 4.2 months and traditionally use the home for 2-4 weeks in the peak winter ski months and an additional 2-4 weeks in the summer months.
Another reason we have seen more recently is the quality of skiing in Colorado as compared to Europe. Due to our elevation with most resort base areas above 8,000 feet and in the case of Summit County Colorado over 9,000 feet the quality of snow and longevity of the season has been a winning factor. In North America, the Rocky Mountains offer the steepest terrain and most ski-able acres, with variable terrain from above tree-line bowls and cliff bands, to aspen glades and pine cutes.
Investment is another reason. As we have stated due to our currency environment many international buyers can purchase here for quite a bargain. Take for example a $1.5 million dollar home on the ski slopes of Breckenridge can be had for less than 800,000 pounds or around 950,000 Euros. A home bought by an international buyer comes with a discount averaging 30% according to the National Association of Realtors estimates. We're a bargain right now for foreign buyers. (See the link below for current currency exchange rates). Many international buyers can purchase their dream vacation home here in the US for the same price or less than they could a nice flat or apartment in their home cities.
http://www.x-rates.com/calculator.html
Income and appreciation are another factor. By purchasing in desirable resort towns like Breckenridge, Keystone, Copper Mountain, and Vail, many international buyers ensure themselves of a steady flow of rental income. Due to exchange rates on the purchase of the home many purchases are positive cash flow generators from the start. If you add in the additional appreciation many resort communities see they have become very profitable for our foreign buyers as they sell them in later years.
We have been working with foreign buyers for a number of years now and we have never seen the level of activity as we have in recent months. We see this as a way to diversify your investments and International buying power has increased tremendously.
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Jason and Deanna are Colorado resort home brokers and focus on Vacation, second, and Investment properties.
http://www.ski-homes-breckenridge.com/
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Hi Jason and Deanna:
I've worked with clients who are happy with the EURO currency exchange (compared to the US dollar) who are cashing in and I've heard that there's a lot of Canadians who are cashing in in the currency exchange....my broker sold ocean front acreage and the most of his profit was in currency, not the appreciation in property values. So it will be interesting to see what happens in 6-18 months.