Thursday, June 14, 2012

More overseas buyers look to the U.S.

International buyers accounted for 8.9 percent of all property purchases in the United States of America during the 12 months ending March 2012, according to new data from the National Association of Realtors.

Total residential international sales during the period equalled US$82.5 billion, up from US$66.4 billion in 2011. Total international sales were evenly split between non-resident foreigners and recent immigrants. Factors driving purchases include low property prices, the relative weakness of the dollar and a desire from international buyers to have U.S. property in their portfolio.



“Today’s advantageous market conditions have drawn more and more foreign buyers to the U.S. in recent years, signalling how desirable and profitable owning property in this country can be,” said NAR President Moe Veissi, broker-owner of Miami-based Veissi & Associates, Inc.

“Low housing prices, a good inventory condition and increased buying power with today’s exchange rates helps to attract international clients. Foreign buyers also have the advantage of working realtors who specialise in serving international clientele have a truly global perspective; they know what hurdles foreign buyers  face when purchasing property in the U.S., and have the expertise and knowledge that comes from working with clients from different cultures and real estate practices.” 

International buyers bought homes throughout the country, but four states accounted for 51 percent of the purchases – Florida, California, Texas and Arizona. Florida has been the fastest growing destination of choice, accounting for 26 percent of foreign purchases. California was second with 11 percent and Texas and Arizona accounted for seven percent.

Proximity to the home country, the presence of relatives and friends, the convenience of air transportation, and climate and location are all important considerations to prospective foreign buyers.

Locations on the East Coast generally attract European buyers, while Asian buyers tend to purchase on the West Coast, particularly California. Florida attracts a diverse set of international buyers including South Americans, Europeans and Canadians. Meanwhile, Texas remains popular among Mexican buyers. Within markets in an individual state, it is not unusual to find concentrations of people grouped by nationality.   

“Foreign buyers recognise that owning a home in the U.S. has many benefits, both financial and social,” added Veissi. “Many purchase property as an investment, vacation home, or to diversify their portfolio. In addition, many recent immigrants view homeownership as an important accomplishment. They believe that being a homeowner is one of many ways they become established in the U.S. and attain stability, security, and a sense of community.”

International buyers came from all over the globe, but Canada, China (including Hong Kong), Mexico, India, and the United Kingdom accounted for 55 percent of all international transactions, according to the survey. Canada and China remain the fastest-growing home countries. Canada accounted for 24 percent of international sales while China accounted for 11 percent, up from nine percent in 2011. Mexico was third with eight percent of sales and India and the U.K. both accounted for six percent.

A total of 45 percent of international purchases were under US$250,000, and there appears to be a gradual increasing trend toward purchases in the US$250,000 to US$500,000 price range. In 2012 this range accounted for 30 percent of purchases, up from 28 percent in 2011. The average price paid by an international buyer was US$400,000 compared to the overall U.S. average of US$212,000.

There are several reasons why the average international home price is higher than the average overall price. The international client is typically wealthier than the domestic buyer and is looking for a property in a specialised niche, for example, a larger property suitable for multi-generational living, or a property that establishes the individual’s presence and standing in the community.

Many homes purchased by foreign buyers are used as a primary residence. Vacation and rental use are also major reasons for a purchase. More than half – some 66 percent – of survey respondents reported international buyers purchased detached single-family homes. About half of international buyers, 52 percent, preferred to buy in a suburban area and about a quarter, 23 percent, bought in a central city/urban area.
Sixty-two percent of international purchases were all cash, which has increased since 2007. International buyers still experience many financing challenges when purchasing a home in the U.S. In fact, among transactions that failed, realtors reported that in 26 percent of the cases financing issues were the problem.

The difficulties facing foreign buyers in trying to obtain a mortgage include lack of U.S.-based credit history and hurdles in meeting mortgage requirements. Other reasons for not purchasing properties were cost/taxes/insurance and immigration laws.     

A total of 27 percent of realtors reported having worked with international clients this year, while some 52 percent reported that international transactions accounted for one to 10 percent of their total transactions. Some 27 percent reported that they made up more than 10 percent of total transactions.

Realtor specialisation on the buyer’s side of the market – such as foreign language capabilities, cultural affinity or orientation with the prospective purchaser and experience in explaining the U.S. real estate – were noted as being important in working with foreign buyers.

Andrew Batt, Regional Group Editor for PropertyGuru, Asia’s leading property portal group, said; “The number of American projects being marketed to buyers in Southeast Asia has certainly increased in the last few years. A U.S. property investment represents good value for money right now, but as with all investments you need to conduct proper due diligence.”

View the original article here

Source From Property Guru

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