International Buyers of US Residential Real Estate
Every year since 2007 the National Association of Realtors [NAR] has released a survey of foreign buyers of U.S. residential real estate. This year’s survey covers March 2013 to March 2014. Foreign buyers are defined as either those non-residents or those who have immigrated within the last two years.
For this period nationwide, the total sales volume to international clients was $92.2 billion, a 35% increase from the previous period’s level of $68.2 billion. The dollar level of international sales was roughly 7% of the total U.S. homes sales of $ 1.2 trillion for the same period . Compared to the previous year, sales to foreigners increased both in numbers of transactions and in average price.
Where Do International Buyers Come From?
Foreign buyers come from all over the world, but the top countries of origin are Canada, China, Mexico, India, and the UK which together represent 54% of all sales to foreigners. Canadians bought the most in terms of number of sales, but Chinese bought more in terms of dollar volume. As Chinese tend to purchase in a few pricey states, California, Washington and New York, so their average home price is higher than most. Canadians purchased in lower-priced states of Arizona and Florida.
Foreign Buyers In California
By far the greatest number of foreign buyers in California come from China which includes PRC, Taiwan and Hong Kong. California and Washington are destination states partly because of the proximity to Asia.
AR’s newly released 2014 International Home Buyers Survey,showed despite a slowing in the California housing market in 2014, international home-buying activity continued its momentum. A large percentage were from China and their purchases remained very cash-strong.
Since obtaining mortgage financing is difficult for non-residents, though not impossible by any means, 66% of international buyers paid all cash , down slightly from 69% in 2013. Those who purchased homes below $500,000 had the greatest tendency to pay all cash (66%), compared to those who purchased homes costing $500,000 to $1 million (57%).
Overseas buyers tend to be more affluent than the average California buyer. Most have already established homes in their own countries and are seeking resort/rental properties abroad. Some are looking for a more secure place to put their money and the US, and especially California, figure high on the list of desirable locations.Many overseas buyers find the stability of their home countries questionable and seek to protect their assets abroad and specifically in the US. This is particularly true of affluent mainland Chinese as the home economy is now constricting.
Since non-resident visas are for no more than six months, many international buyers plan to rent their properties for at least half the year. Rentability and profitability are important considerations for such buyers.
Overseas buyers purchased more expensive homes at a median price of $490,000, compared to 2014’s single-family median home price of $447,000. Those who purchased homes below $500,000 had the highest percentage of investment purchases (40%), compared to those who purchased homes between $500,000 and $1 million (17% for investment) or those who purchased homes over $1 million (34% for investment reasons).
Nearly half of overseas buyers purchased a home in the suburbs. The percentage who purchased in a city center or urban area declined from38% in 2013 to 33% in 2014, while purchases in small towns/rural areas increased from 9% to 10% over the same period. About 67% of international buyers bought single-family detached homes, and 23% purchased a condominium or townhomes.
IBs in 2014 intend to keep their property for a median of 7 years, compared to 5 years in 2013.
The percentage of first-time IBs in the U.S. declined from 59% in 2013 to 54% in 2014. 75% of overseas buyers said they purchased in the U.S., primarily to be closer to family/friends, for investment and tax reasons, or because of a child attending college in the U.S.