US sales to foreigners down but they are buying higher value real estate
Total property sales in the United States to international home buyers have decreased from last year, but in terms of price the sales dollar volume increased 13%, the latest data from estate agents shows.
From April 2014 through March 2015 total international sales were estimated at $104 billion, compared to the previous year's estimate of $92.2 billion, according to the figures from the National Association of Realtors.
In 2014 sales transaction to buyers outside of the US dropped 10%, possibly due to the strengthening of the US dollar in relation to international currencies and weakening foreign economies, according to NAR chief economist Lawrence Yun.
‘However, the amount of money spent has increased; this means international purchasers in the US have become an upscale group of buyers, spending more money on fewer homes,’ he explained.
In 2014 five countries accounted for 51% of all purchases by international buyers. These were led by China, followed by Canada, Mexico, India and the United Kingdom, the data also shows.
For the first time, buyers from China exceeded all other countries in terms of units purchased and dollar volume, purchasing an estimated $28.6 billion worth of property. Buyers from Canada followed with $11.2 billion in purchases, followed by India with $7.9 billion, Mexico with $4.9 billion and the UK with $3.8 billion.
International buyers tend to purchase more expensive properties with the average purchase price being $499,600, compared to the overall US average house price of $255,600. Chinese buyers typically purchased the most expensive properties, at an average price of $831,800.
Some 35% of real estate agents reported working with an international client in 2014, up from 28% in 2013 and 46% said international buyers were seeking main homes, 20% wanted buy to let and 26% was for investment rentals.
Global buyers also purchased properties for commercial rentals and as residences for children studying in US educational institutions. Indian buyers were the most likely to purchase a primary residence with 79% doing so, while Canadian buyers were most likely to purchase property as a vacation home with 47% doing so.
While international buyer clients purchased property across the nation, four states accounted for half of all international sales: Florida, California, Texas and Arizona. Florida remains the top destination for international buyers with 21% of all foreign purchases, followed by California at 16%, Texas at 8% and Arizona 5%.
Chinese buyers tended to gravitate towards the West Coast, which provides ample education, business and trade opportunities, while Canadians seeking winter vacation opportunities focused on the Southwest and Florida.
The majority of international purchases, some 55%, were all-cash, compared to about 25% of all purchases made by domestic buyers. Mortgage financing tends to be an issue for non-resident international clients because of a lack of a US based credit history or Social Security number, difficulties in documenting mortgage requirements, and financial profiles that can be different from those normally submitted to financial institutions by domestic residents.