Short List
Invasion of the foreign money
Foreign investment in the U.S. real estate market surged 26 percent to $92.2 billion in the one-year period ending in March 2014, which is up from the year-earlier level of $68.2 billion, according to the National Association of REALTORS® 2014 Profile of International Home Buying Activity.
Four states accounted for 55 percent of the total reported purchases by foreign buyers Florida, California, Arizona and Texas. Florida remains the destination of choice, claiming a 23 percent share of all foreign purchases. California ranks second with 14 percent, followed by Texas with 12 percent and Arizona with 6 percent. According to Realtor.com, the top five cities searched online by international buyers in 2014 were Los Angeles, Miami, Las Vegas, Orlando and New York City.
The study finds that European buyers are generally attracted to states with warmer climates, such as Florida and Arizona, while the West Coast tends to attract Asian purchasers. Indian buyers tend to gravitate toward states that are home to large information technology companies, such as California, New York and North Carolina. Within markets in an individual state, it is not unusual to find concentrations of people grouped by nationality, which might indicate that word-of-mouth and shared experiences influence home purchases, the study concludes.
Nearly 60 percent of reported international transactions were all cash, compared to just one-third of domestic home purchases. Foreign buyers hail from all over the world, but those from Canada, China, Mexico, India and the U.K. accounted for approximately 54 percent of all international transactions last year. Twenty-eight percent of REALTORS® say they worked with international clients this year, but only 4 percent of those who reported having an international client closed 11 or more international transactions in a year.
We live in an international marketplace, so while all real estate is local, that does not mean that all property buyers are, says NAR President Steve Brown, CRS. 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.
