International buyers: Are they buoying the US housing market?
The post-housing-credit residential market might be lousy (actually, worse than it has been since 1963) but at least one group is buying US real estate in growing numbers. They just aren’t Americans.
International shoppers scooping up US properties increased this year, albeit slightly, according to a report released by the National Association of Realtors this week.
Their purchases accounted for 4.6 percent of the residential market, or about $41.7 billion worth of US property from April 2009 through March 2010. That's up from the 4.2 percent ($38.8 billion) of the residential market purchased by international buyers in 2008-2009. About 28 percent of American realtors reported having one international client this year, as opposed to 23 percent the year before, according to the report.
Many international buyers cited the emerging economic recovery as a driving force to buy, and most saw the US as a desirable location to own a home. A majority of international buyers purchased homes in regions most impacted by the housing bubble -- including Florida, California and Nevada -- perhaps in part because of the increased inventory available in these areas.
International buyers also spent significantly more than domestic buyers. They paid, on average, $219,400 on residential properties, as compared to $173,000 for existing home sales during the same period.
But financing continued to be a problem for foreign buyers. About 55 percent of international buyers paid in cash for their homes instead of taking out a mortgage.
And, though international buying did bump up this year, it could have been much higher. That’s because one of the most important factors that foreign buyers listed as influencing their decisions to purchase property in the US was the strength of the currency against their own. With the euro weakening against the dollar this spring, Euro Zone families planning on purchasing a second home in the US likely thought twice as they saw their spending power decrease.
