The weakening US Dollar and declining home values are discouraging for Americans homeowners. However, for international real estate investors, these conditions present opportunity. The National Association of Realtors (NAR) recently released the 2008 NAR Profile of International Home Buying Activity.
"NAR estimates that between 150,000 and 190,000 homes were sold to foreign nationals from May 2007 to May 2008," according to the NAR press release on the findings. "Recent foreign buyers purchased properties in every state and the District of Columbia. The most popular states where international buyers purchased homes are Florida, California and Texas. Arizona, South Carolina, New York, Washington and Nevada were also popular."
An estimated 150,000 to 190,000 properties were sold to foreign buyers. Nearly half of the properties purchased by foreign buyers were located in the South and 25.4 percent of all property sales to foreign buyers occurred in Florida alone. I am hoping to help change the latter statistic because I firmly believe in South Carolina real estate.
"Foreign exchange rates have helped make U.S. homes more affordable for international buyers," according to NAR's press release. "The euro, for example, has strengthened 24 percent versus the U.S. dollar over the past two years. Home prices are also now more affordable in places such as South Carolina, Florida and Arizona--contributing to those states' popularity among foreign buyers."
The typical foreign buyer bought a single-family home at $297,400, intended for use as a vacation home, where the buyer stayed 2.6 months of the year, according to the findings. 40 percent of foreign buyers made the purchase in cash, compared to just 7 percent of domestic homebuyers who do so. In the previous report, which covered the period between April 2006 and April 2007, 28 percent of foreign buyers made their purchases in cash. This 12 percent increase in foreign buyers who purchased properties in cash can perhaps be attributed to the weakened U.S. dollar and sinking home prices across the country.
Foreigners tend to buy more expensive properties than American real estate investors. They are also more likely to purchase a condo or townhome than domestic real estate investors. Foreign buyers purchase properties that cost an average of 36 percent more than domestic buyers, and 14 percent of properties purchased by foreigners cost $750,000 or more, according to the findings.
Investors from China were the most likely to purchase properties at $1 million and more, with 14 percent of Chinese buyers doing so. The median price paid by real estate investors from China was $450,000, the highest median of any location in the report.
Nearly one quarter of investors from India purchased properties to use as rentals, the highest found in the report.
"People from North America, Europe and Asia accounted for more than 85 percent of recent foreign home buying transactions. The top six countries of origin for foreign home buyers, in rank order, were Canada, the United Kingdom, Mexico, China, India and Germany," according to NAR's press release. "This year, Canada replaced Mexico as the country with the largest share of foreign buyers in the U.S. The percentage of Canadian buyers doubled from last year, from 11 percent to 23.5 percent."
26 percent of Realtors have worked with foreign homebuyers, according to Inman News; a slight decrease from the 32 percent in NAR's previous report, which covered the period between April 2006 and April 2007. This decrease could be attributed to more agent specialization with foreign investors or a weakened opinion of the American real estate market.
The research included in the study covers the period between May 2007 and May 2008 and was based on responses from about 4,000 Realtors who work with international real estate investors. Foreign buyers were defined as those who aren't classified as foreign-born residents of the U.S., and who principally reside out of the U.S.
To sum this all up, now is an excellent time for international buyers to purchase real estate in the U.S. I am confident the trend will continue through the remainder of 2008 and into 2009 as well.
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