by Broderick Perkins
(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.
Compared to foreigners, that makes domestic real estate investors real pikers.
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.Refinance at Todayâs Low Rates!
Follow the link to continue reading the related articles