The data from the National Association of Realtors shows that interest in US properties continues to grow, signalling that America continues to be regarded by international buyers as a great place to own property.
The survey, which asked real estate agents to report their international business activity within the US for the 12 months to the end of 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 US credit standards and unfavourable exchange rates.
Of total international transactions, $34.8 billion or 51%, were attributed to foreign buyers with permanent residences outside the US and $33.4 billion or 49%, were attributed to buyers who are recent immigrants or temporary visa holders residing for more than six months in the US.
‘Foreign buyers are experiencing hurdles not only abroad, but also here in the US when it comes to purchasing property. Difficult economic conditions, particularly in Europe, have impacted foreign buyers, but several factors in the US have also affected their purchasing power here,’ said NAR president Gary Thomas.
‘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,’ he added.
Foreign buyers continue to have a substantial interest in US properties. Over a five year time frame more than 70% of real estate agents reported a constant or increasing level in the number of international clients contacting them.
‘Realtors provide international buyers with a significant advantage when purchasing property in the US. Those who have earned NAR’s Certified International Property Specialist designation have received specialised training and are well prepared to service the international market,’ explained Thomas.
Some 27% of real estate agents reported having worked with international clients this year. They also reported that the most important factors influencing international clients’ purchases were that the US is viewed as a desirable location and that the real estate market is regarded as a profitable investment.
Canadians were the biggest group of international buyers at 23% followed by Chinese at 12%, Mexicans at 8%, Indians at 5% and British buyers at 5%. These five countries accounted for approximately 53% of transactions, with Canada and China the fastest growing source of buyers 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. Some 62% of Mexican buyers purchased property in California and Texas, with a median price of $156,250.
International buyers tend to cluster in specific locations based on countries of origin, as well as several other factors. ‘Many factors influence foreign buyers’ decisions on where to purchase in the US but the most important are proximity to home country, presence of relatives and friends, availability of job and education opportunities, and the climate,’ said 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,’ he added.
Florida had the largest number of international buyers at 23% followed by California at 17%, Arizona and Texas both at 9%, and New York at 3%.
About half of foreign buyers preferred to purchase in a suburban area, while a quarter preferred a more central city or urban area. A majority purchased a detached single family home and 63% paid 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 buyers. International buyers are more likely to be substantially wealthier and looking for a property in a specialised niche.
