California Has 14% Share of Foreign Housing Buyers
Foreign Buyers Up Their Stake in U.S. Housing Market
Daily Real Estate News | Wednesday, July 09, 2014
International buyers continue to flock to the U.S. to purchase and invest in properties. Favorable exchange rates, affordable home prices, and rising affluence abroad is driving interest, according to the 2014 Profile of International Home Buying Activity conducted by the National Association of REALTORS®.
From April 2013 through March 2014, total international sales are estimated at $92.2 billion, a rise from $68.2 billion from the previous period, NAR reports. Twenty-eight percent of REALTORS® reported working with international clients this year.
“We live in an international marketplace; so while all real estate is local, that does not mean that all property buyers are,” says Steve Brown, NAR’s president. “Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability, and an incredible opportunity for investment in their future.”
Top Destinations for Foreign Buyers
Four states alone have accounted for 55 percent of the total purchases by international buyers recently: Florida, California, Arizona, and Texas.
The following are the top destination states for foreign home buyers and investors:
- Florida, which has a 23 percent share of all foreign purchases
- California, a 14 percent share
- Texas, a 12 percent share
- Arizona, a 6 percent share
The top five cities searched online by international buyers in 2014 were: Los Angeles, Miami, Las Vegas, Orlando, and New York, according to a separate analysis by realtor.com®.
International buyers are coming to the United States from all over the world, but the highest interest in U.S. property is being driven by Canada, China (The People’s Republic of China, Hong Kong, and Taiwan), Mexico, India, and the United Kingdom, which accounted for about 54 percent of all reported international transactions.
Canadian residents continue to have the largest share of U.S. purchases, but dropped their share from 23 percent in 2013 to 19 percent in 2014. Buyers from China hold the lead in dollar volume, purchasing an estimated $22 billion with an average sale cost of $590,826, according to the NAR study. China was also the fastest-growing source of transactions, now accounting for 16 percent of all purchases, up 4 percent from last year.
Snapshot of Foreign Home Purchases in the U.S.
International buyers are more likely to make all-cash purchases when compared to domestic buyers, the survey shows. In 2014, nearly 60 percent of reported international transactions were all cash, compared to only one-third of domestic purchases.
Mortgage financing tends to be a major problem for international clients due to a lack of a U.S. based credit history, lack of a Social Security number, difficulties in documenting mortgage requirements and financial profiles that differ from those normally received by financial institutions from domestic residents.
The survey also revealed the following about foreign buyers’ home purchases:
- 42% of foreign buyers use their U.S. home as a primary residence.
- About 65% of purchases involved a single-family home.
- Nearly half of foreign buyers say they prefer properties in a suburban area; about a quarter say they prefer a central city or urban area; and about 13 percent chose to purchase in a resort area.