Real Estate Matters

Each year the National Association of Realtors (NAR) conducts a survey of its members in order to gather information regarding foreign real estate purchases in the United States and the 2008 survey has just been released.

Of particular mention is that Canadian buyers doubled from 2007. In fact, Canada and the U.K. accounted for 36.1 percent of purchases. Mexico, which accounted for the largest share of foreign buyers last year, ranked third in 2008. Single-family homes were the most popular choice among international home buyers accounting for three quarters of purchases. Slightly less than 20 percent of foreigners bought a condominium. However, the survey noted that condominiums were most popular among those foreign buyers from Canada with nearly half of all properties purchased by Canadian buyers were condominiums.

The survey also noted that international buyers purchase properties across the U.S., but the South (46.8percent) and the West (30 percent) continue to dominate. These two regions captured more than three quarters of all foreign purchases. North American buyers were more likely to purchase in the West than were those from Europe or Asia. More than half of Europeans bought properties in the South. The NAR survey said that the top four states for completed international residential transactions were Florida, California, Arizona and Texas (these four states were also the top destinations in 2007, according to the survey). In addition, the climate in most areas of the top four states is relatively mild, compared to that of Canada and most European countries.

Foreign buyers from China paid the most for their U.S. property, at a median price of $450,000, with those from the U.K. paying a median of $350,000. More than a third of buyers from India and Germany, and fewer than 33 percent of Canadians paid between $200,000 and $300,000 for their U.S. property. Also, according to the survey, four in ten paid for their U.S. property in cash and only slightly more than half of foreign buyers, 54 percent, used a mortgage to finance their purchases. The survey noted that Canadians and Germans were most likely to pay cash for their U.S. purchases.

The survey noted that the value of the dollar as compared to European and Canadian currencies has dropped over the last several years making the true cost of a U.S. property less in foreign monetary terms. The majority of respondents selling international properties noted that the weak U.S. dollar had impacted foreign sales purchases.

More than half, 55 percent, of international buyers purchased a U.S. home as a vacation property for family and friends, an increase of 8 percent from last year’s survey results. Those purchasing a U.S. property for both vacation and investment purposes were about the same as last year, with 31.6 percent.

The importance of international real estate purchases continues to increase in spite of tough economic times, and this comprehensive survey is just one way of measuring changes. If you would like further information regarding the survey, please don’t hesitate to contact me.

Cheers,

Bill Geller