US property sales to overseas buyers reach second highest level
Sales of homes to international buyers in the United States have reached their second highest level, according to the latest data from the National Association of Realtors. The association’s 2013 Profile of International Home Buying Activity shows that sales to overseas buyers now amount to 6% of total existing home sales.
Total international sales were $68.2 billion for the year ending March 2013, down approximately $14 billion from last year and NAR said that the dip is due to economic conditions that are likely to be transitory. It points out that rising US home prices, coupled with the strengthening of the dollar against other currencies has resulted in higher effective prices for foreign buyers. The Euro and currencies from Brazil, India, and Mexico weakened against the dollar during 2012 and only the Canadian dollar strengthened.
There has also been slower growth in a number of major economies, a slow recovery of the US economy, tighter credit standards and fewer houses on the market. ‘Foreign buyers are experiencing hurdles not only abroad but also here in the US when it comes to purchasing property. Difficult economic conditions, particularly in Europe, have impacted foreign buyers, but several factors in the US have also affected their purchasing power here. Tight credit standards have made financing challenging for immigrants, and low housing inventories have made finding a house difficult. However, none of these factors appear to be permanent,’ said NAR president Gary Thomas.
Quote from PropertyCommunity.com : “Home sales in the United States are at their highest level since 2009 and are set to remain high as the number of new properties coming on the market is limited, according to real estate agents.”
Of the total international transactions of $34.8 billion some 51% is attributed to buyers who reside outside the US and $ 33.4 billion or 49% to recent immigrants or temporary visa holders who are residing in the US for more than six months such as students and workers. Canadians led the way, buying the most US properties, followed by China, Mexico, the UK, and India. Other countries in the top rankings included Germany, Argentina, Israel, Australia and Korea.
Florida was the biggest beneficiary with 23% of all international purchases. Behind Florida is California with 17%, and Arizona and Texas with 9% each. Other states in the top rankings include New York, Virginia, Nevada, Hawaii, Illinois and Michigan.
The median price of homes purchased by international buyers was significantly more than the median price paid by US domestic buyers. The international median sales price was US$275,862 while the US existing home median sales price was US$179,867. The report predicts that traditional favourites, such as Florida, Arizona, Texas, and Southern California, are benefitting the most and are likely to remain as preferred destinations.
Canadians, who account for nearly a quarter of home sales to foreign buyers, expected to continue to lead overseas investment in the coming months due to the strength of the Canadian dollar. The gap between Canadian and US home prices has stretched the widest this year than it has been in a decade, providing even more of an incentive. House hunters from Canada heavily favour Florida and Arizona, according to NAR economist Jed Smith. ‘They buy for vacation purposes and like to have a place in the sun,’ he said.
Real estate agents in these sun and sand states are aggressively promoting their listings to Canadians via direct mail, e-mail, and newspaper advertising.