(6/1/2011) Some say the end is near -- for either an up or down housing
market -- when foreigners rush ashore to jump on the bandwagon or go for the
spoils.
Right now they are after the spoils.
"In recent years, we have seen more and more foreign buyers coming here
to take advantage of low prices and plentiful inventory," said NAR President
Ron Phipps, broker-president of Phipps Realty in Warwick, RI.
Foreign buyers are joining domestic investors to take up some of the
slack left by first-timers and other traditional buyers who are more
susceptible to the hostile lending market, according to the National
Association of Realtors 2011 Profile of International Home Buying
Activity.
"The word that may apply in this case is capitulation. Smart investors,
both foreign and domestic, want to invest in an asset when no one else wants
to and that may be exactly what's happening here. Investing in real estate
may seem a safer bet by comparison than other options at this point," said
Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information
publisher and interest rate tracker.
Sales from those abroad or those who were new to this country, equaled
$82 billion for the past year ending March 2011, up from $66 billion in 2010.
The sales were split evenly between non-resident foreigners and recent
immigrants and amounted to about 8 percent of the $1.07 trillion figure for
all existing-home sales in the U.S. during the period. Foreigners purchased
7 percent of U.S. existing homes or $907 million worth in 2010.
Foreign buyers are coming to America
with boatloads of money.
Sixty-two percent of foreign buyers used all cash. In recent months,
nearly one in three foreigners buying existing homes were plunking down bags
of cash, NAR said.
Only 18.5 percent of domestic investors were cash buyers, according to a
recent Move.com study.
NAR also said foreign buyers are high-rollers. The
average purchase price paid by an international buyer was $315,000 compared
to the overall U.S. average of $218,000. However, 45 percent of
international purchases were under $200,000.
Again, that beats out American investors.
Another study by Econohomes.com said
today's breed of U.S. investors is only putting out for homes in the
$50,000 market.
According to NAR, foreign buyers favor U.S. properties because they are
generally cheaper than comparable foreign properties and right now they are
bargain basement steals. They also see homes as a good long-term investment
with the potential for rental income.
Some Realtors say more foreign families are also housing their college
kids in properties near colleges and universities. International demand also
stems from foreign executives temporarily working in America.
Said Phipps, "Many foreigners perceive owning a home here as an important
accomplishment in their efforts to become established in this country."
Most buyers were Canadians, accounting for 23 percent of sales to
foreigners, followed by China and, tied for third, Mexico, the United
Kingdom and India. The top five nations accounted for 53 percent of all
international transactions. Argentina and Brazil both reported an increase
in foreign sales, together account for five percent of all sales, up from
two percent in 2010, NAR said.
Foreigners are largely shopping in Florida (31 percent), California (12
percent), Texas (9 percent) and Arizona (6 percent), NAR reported.
Single-family homes accounted for 61 percent of foreign sales, compared
to 36 percent for condos, apartments or townhomes.
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