The weakening U.S. dollar
and declining home values are largely discouraging for Americans
homeowners. For international real estate investors, however, such
conditions present opportunity. The National Association of Realtors
(NAR) recently released the 2011 NAR Profile of International Home
"NAR estimates that between 650,000 and 790,000 homes were sold to
foreign nationals from May 2009 to May 2010," according to the NAR press
release on the findings. "Recent foreign buyers purchased properties in
every state and the District of Columbia. The most popular states where
international buyers purchased homes are Florida, California and Texas.
Arizona, New York, Washington and Nevada were also popular."
Nearly half of the properties purchased by foreign buyers were
located in the South; 25.4 percent of all property sales to foreign
buyers occurred in Florida alone. (For more information on foreign
investment in Florida's real estate market, please see our previous
article, Europeans Set Sights on Florida.)
More than 25 percent of the estimated 650,000 to 790,000 sales to foreign buyers were in Florida
exchange rates have helped make U.S. homes more affordable for
international buyers," according to NAR's press release. "The euro, for
example, has strengthened 24 percent versus the U.S. dollar over the
past two years. Home prices are also now more affordable in places such
as Florida and Arizona, contributing to those states’ popularity among
The typical foreign buyer bought a single-family home at $297,400,
intended for use as a vacation home, where the buyer stayed 2.6 months
of the year, according to the findings. 40 percent of foreign buyers
made the purchase in cash, compared to just 7 percent of domestic
homebuyers who do so. In the previous report, which covered the period
between April 2009 and April 2010, 28 percent of foreign buyers made
their purchases in cash. This 12 percent increase in foreign buyers who
purchased properties in cash can perhaps be attributed to the weakened
U.S. dollar and sinking home prices across the country.
Foreigners who invest in U.S. real estate also differ from their
domestic counterparts in other ways. They tend to buy more expensive
properties than domestic real estate investors, and are more likely to
purchase a condo or townhome than domestic real estate investors.
Foreign buyers purchase properties that cost an average of 36 percent
more than domestic buyers, and 14 percent of properties purchased by
foreigners cost $750,000 or more, according to the findings.
Investors from China were the most likely to purchase properties at
$1 million and more, with 14 percent of Chinese buyers doing so. The
median price paid by real estate investors from China was $450,000, the
highest median of any location in the report.
Nearly one quarter of investors from India purchased properties to use as rentals, the highest found in the report.
"People from North America, Europe and Asia accounted for more than
85 percent of recent foreign home buying transactions. The top six
countries of origin for foreign home buyers, in rank order, were Canada,
the United Kingdom, Mexico, China, India and Germany," according to
NAR's press release. "This year, Canada replaced Mexico as the country
with the largest share of foreign buyers in the U.S. The percentage of
Canadian buyers doubled from last year, from 11 percent to 23.5
26 percent of Realtors have worked with foreign homebuyers, according
to Inman News; that is down slightly from the 32 percent of respondents
in NAR's previous report, which covered the period between April 2006
and April 2007. The drop may be attributed in part to decreased
confidence in the U.S. real estate market in the wake of its downturn.