NAR: International Buyers Now Account For About 7% Of U.S. Home Sales

Posted by Patrick Barnard on July 09, 2014 No Comments
Categories : Residential Mortgage

International home buyers – including those who recently immigrated to the U.S. – purchased an estimated $92.2 billion in real estate from April 2013 through March 2014 – about a 35% increase from the previous period's level of $68.2 billion, according to the National Association of Realtors' (NAR) Profile of International Home Buying Activity report.

Foreign buyers now account for about 7% of all U.S. home sales, according to the report, which is based on online searches and other data.

Florida, California, Arizona and Texas continued to be the top states for foreign investors and accounted for a combined 55% of all U.S. international home sales. Those states represented 23%, 14%, 12% and 6% of all international home sales, respectively.

The top five cities searched online by international buyers in 2014 were Los Angeles; Miami; Las Vegas; Orlando, Fla.; and New York City.

Favorable exchange rates, affordable home prices and rising affluence abroad continue to drive international buyers to the U.S. to purchase properties and make real estate investments, according to the report.

‘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, president of NAR, in a statement. ‘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.’

According to the report, 28% of Realtors reported working with international clients this year.

NAR's research also finds that international buyers are more likely to make all-cash purchases when compared to domestic buyers. In 2014, nearly 60% of reported international transactions were all cash, compared to only one-third of domestic purchases.

This is partly due to the fact that mortgage financing tends to be a 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, NAR reports.

About 42% of international buyers use their U.S. home as their primary residence. Non-resident foreigners are limited to six-month stays in the U.S., so these buyers largely use the property for vacation or rental purposes or as an investment.

So where are all these foreign buyers coming from? According to the report, Canada maintained the largest share of purchases, dropping from 23% in 2013 to 19% in 2014. However, China held the lead in dollar volume, purchasing an estimated $22 billion in properties with an average sale cost of $590,826. Chinese immigrants now account for 16% of all home purchases in the U.S., up 4% from last year.

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