Despite the faltering domestic markets in the UK and Europe, the weak Dollar is still keeping foreign buyers interested in US real estate, according to trade body the National Association of Realtors (NAR).
Releasing the full findings from its 2008 NAR Profile of International Home Buying Activity, it found that business from overseas buyers kept agents in the country busy throughout last year, purchasing in every US state and territory, however at a somewhat smaller rate than last year.
Of the 4,000 US-based agents surveyed between May 2007 – May 2008, some 26% served international clients in the past year and nearly half of those clients ended up purchasing a home. The primary reasons some clients did not eventually buy a house were home price concerns, immigration laws, and property taxes. “If visa regulations that favor longer stays for overseas buyers such as retirees from abroad were in place, these sales levels would be even higher,” said Tony Macaluso, 2008 chair of NAR’s international business group.
Realtors who have sold homes to international clients reported that their transactions with these clients accounted for about 16% of their entire business, down from 18% in 2007’s survey. For about 8% of agents who worked with foreign buyers, more than half of their transactions were from international sales.
Although it is still seen as a healthy number of international buyers entering the market to supplement the declining domestic sector, the faltering markets in the UK and Europe have had an impact on the amount buying in the US this year – predicted to be far higher then current figures would suggest.
The NAR report suggested that foreign exchange rates have helped keep US homes more affordable for international buyers. The Euro, for example, has strengthened 24% versus the US dollar over the past two years.
“Many international buyers recognize that real estate is an excellent investment and are drawn today by abundant inventory, low interest rates and a softer dollar. These conditions allow them to own their own a piece of the American dream,” said NAR President Richard Gaylord.
Foreign buying trends in USA
May 2007 – May 2008: Source NAR
– 150,000 – 190,000 properties sold to international buyers
– Florida, California Texas. Arizona, New York, Washington, Nevada – most popular locations
– 14% of foreign bought property cost over $750,000
– Average foreign purchase cost $297,000
– 40% of buyers paid in cash
– Canada, UK, Mexico, China, India and Germany most active buyer markets
– Percentage of Canadian buyers doubled from last year, from 11% to 23.5% – now the biggest foreign buyer market in the US.