Foreign buyers aren't bailing on the U.S. housing market.
One quarter of real estate professionals surveyed this year said business with international clients has increased in the last five years. Another 67 percent said the number of sales to overseas clients has held steady. Only 8 percent noted a decline.
Pragmatic about the types of property they buy, foreigners are more partial to condos than Americans and they appear to be more bullish on the investment aspect of home buying.
While the number of Americans who buy second homes as an investment dropped from 28 percent to 22 percent from 2005 to 2006, foreigners' buying investments were also at 22 percent in 2006, as an additional 31 percent purchased properties as both a vacation and investment property.
A first for 2007, the "National Association of Realtors (NAR) Profile of International Home Buying Activity", doesn't have historic comparative data, but it does reveal some pretty healthy buying from foreigners.
In 2006, most international home buyers purchased single-family homes or townhomes, but showed a much stronger preference for condos (22 percent) than Americans (12 percent).
"Foreigners lean toward condos for the 'no maintenance' issue. They don't have time to pain and manage a home that is (probably) over a thousand miles from home. Also they often have the opportunity to fill the time they can't use the unit with a tenant who will assist with the expenses -- often making them a good investment as well as a second home," said Dane Hahn and associate broker with Keller Williams Coastal Realty in Portsmouth, NH.
International homeowners spent an average of only 4.2 months of the year in their U.S. property in 2006, according to the survey.
Forty-seven percent of all international buyers purchased homes exclusively for vacation, while 22 percent were motivated primarily by investment. Nearly a third of foreign buyers cited both vacation and investment as reasons for their purchase.
Their reasons for buying are similar to American second-home buying habits but the overall sales trend for foreign buyers appears to be up or holding steady.
All U.S. second home (both investment properties and getaway vacation homes) sales plummeted last year, falling 18.56 percent as sales of primary residents fell only 4.1 percent, according to NAR.
The second home and foreign investment markets are discretionary cash markets and, apparently, foreigners have more moolah to move in with -- 28 percent bought their homes with cash, compared to only 8 percent of all U.S. buyers.
Their buying power is also pretty substantial. The median sales price of homes purchased by international buyers was $299,500, compared to the U.S. median price of $221,900 during the survey period.
But the source of financing for some can be a hindrance.
"I worked with a couple from Moscow last year who wanted a beach front condo north of Boston. They had a significant down payment, and were very anxious to become owners in the U.S. But in the end, they couldn't get the funds out of Russia, and were unable to be buyers," Hahn said.
One third of all international buyers hail from Europe, but buyers from Asia and North America (outside the United States) each represent about one-fourth of the total market. Sixteen percent of all international buyers are from Latin America. By individual country, most buyers come from Mexico (13 percent), the United Kingdom (12 percent) and Canada (11 percent).
Foreign buyers purchase homes across the United States, but 52 percent of sales in 2006 were concentrated in three states, Florida (26 percent), California (16 percent) and Texas (10 percent). Arizona and New York followed.
By region, the South attracted 49 percent of international buyers last year, while 31 percent purchased homes in the West.
Apparently international buyers are pretty savvy about location too.
The list of commonly shopped markets, generally gibes with Forbes magazine's recent "Best Places To Buy A Vacation Home" a list of the fastest appreciating areas as well as hidden-gem markets that come with some of the same geographic advantages as the blue chips, without the high price tag.
"In this country we have always known that housing is a good long-term investment, and many foreign buyers seem to share this view,” said NAR President Pat V. Combs, of Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt.
