U.S. Home Sales to Foreigners Rise as Low Prices Draw Investors
The dollar volume of U.S. homes sold to foreign buyers rose 24 percent in the 12 months through March as investors from Canada, China, India, Mexico and the U.K. took advantage of low prices and favorable exchange rates.
Foreign buyers spent about $82.5 billion in the period, up from a revised estimate of $66.4 billion a year earlier, the National Association of Realtors said today. That accounted for 4.8 percent of the $928.2 billion U.S. market for home sales, the organization said in a report from Washington.
“Low housing prices, a good inventory condition and increased buying power with today’s exchange rates help attract international clients,” Moe Veissi, president of the National Association of Realtors, said in a statement.
U.S. home prices were 35 percent below their July 2006 peak as of March 31, the most recent data available, according to the S&P/Case-Shiller index of values in 20 cities. Sales of previously owned homes rose 10 percent in April from a year earlier as U.S. consumers took advantage of the decline in prices and record-low interest rates, the Realtors group said.
Arizona, California, Florida and Texas accounted for 51 percent of the purchases by foreigners, according to today’s report. Florida has been the fastest-growing destination of choice, accounting for 26 percent of overseas transactions. California was second with 11 percent and Texas and Arizona accounted for 7 percent each.
Canadians made 24 percent of international deals, followed by Chinese buyers with 11 percent and Mexicans with 8 percent. India and the U.K. each accounted for 6 percent of purchases.
International buyers paid an average $400,000 compared with the $212,000 average of all deals in the U.S. Overseas clients are typically wealthier and looking for a specialized property, such as a home suitable for multigenerational living or a vacation house, according to the report.
About 62 percent of international deals were made with cash because the buyers lacked a credit history or lenders don’t offer mortgages for overseas purchases, the Realtors said.
International sales were equally split between recent immigrants and foreigners who live permanently outside the country, according to the report, which was based on a survey in April of 1,745 respondents.
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