NAR’s 2007 Profile of International Home Buying Activity shows that a quarter of REALTORS® report more international business in 2006 than five years ago. Nearly one in five respondents sold a home to an international client in the past year, and one-third say they believe foreign retirees are an increasingly important market in the United States.
The research explored the characteristics of second-home purchases in the United States made by international clients. Here are six of the top findings, which reveal important trends that will help you tap into the expanding international niche:
- Stronger preference for condos and apartments. In 2006, most international home buyers purchased single-family homes or townhomes, and like most domestic home buyers, they financed their purchase. However, they showed stronger preferences for condos/apartments when compared to U.S. home buyers; 22 percent of international buyers purchased condos/apartments, versus 12 percent of U.S. buyers.
- More pay in cash. Twenty-eight percent of foreign buyers bought their houses with cash, compared to 8 percent of U.S. buyers.
- Purchase pricier homes. The median sales price of homes purchased by international buyers was $299,500, which is significantly higher than the U.S. median of $221,900 during the same period.
- Homes used for vacation, investment. Forty-seven percent of all international buyers purchased homes exclusively for vacation, while 22 percent were motivated primarily by investment. Nearly a third of foreign buyers cited both vacation and investment as reasons for their purchase. International homeowners spent an average of 4.2 months of the year in their U.S. property in 2006.
- Buyers from Mexico most prevalent. A third of all international buyers are from Europe, but buyers from Asia and North America (outside the United States) each represent about one-fourth of the total market. Sixteen percent of all international buyers are from Latin America. By individual country, most buyers come from Mexico (13 percent), the United Kingdom (12 percent) and Canada (11 percent). (See below)
- Florida leads the pack. Foreign buyers purchase homes across the United States, but 52 percent of sales in 2006 were concentrated in three states: Florida (26 percent), California (16 percent), and Texas (10 percent). The South attracted nearly half – 49 percent – of international buyers last year, while 31 percent purchased homes in the West.
Canadian home buyers also headed to the South – 46 percent of them purchased home in that region of the U.S. Thirty-eight percent of buyers from Canada bought a property in the West, 10 percent in the Midwest and 6 percent in the Northeast. Similar to Mexican buyers, Florida was the location of choice well over a third of Canadians purchasing homes in the U.S., and California was the second most popular destination.
The U.S. real estate market is still considered a prime investment opportunity for foreign buyers and a “safe haven” in which to put their money. With the weakened U.S. dollar against foreign currencies, those currencies buy a lot more than in previous years. For example, the British Pound Sterling was worth $1.44 in 2001; by 2004 it was worth $1.83. As of mid-year 2007, the pound was worth nearly $2.00. The Euro has also increased in value against the U.S. dollar. More purchasing power for foreign buyers mean they can afford “more house” – particularly in a stabilizing U.S. housing market.