Wednesday, July 14, 2010

American Dream attracting more foreigners

NYT reporter interviews robot
A new study found that 18 percent of all Realtors were estimated to have completed at least one international sale, compared to 12 percent last year. Fifty-five percent of those sales were cash-only deals.

by Broderick Perkins
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Deadline Newsroom - They comprise only a small share of homebuyers in the U.S., but more and more foreign buyers are coming to America for the homeownership piece of the dream.

More than a quarter of Realtors, 28 percent, reported working with at least one international client in the past year, up from 23 percent during the previous Profile of International Home Buying Activity.

The recently released 2010 study, which queried Realtors for a year ending in March 2010, found that 18 percent of all Realtors were estimated to have completed at least one international sale, compared to 12 percent last year.

Foreigners invested $41 billion in homes in the U.S. during the period, 4 percent of the total $907 billion market. Adding recent immigrants, or temporary visa holders, pushed the total to $66 billion, or 7 percent of the market according to the report.

A stronger dollar, desirable U.S. property and the slow, but emerging economic recovery are seen as factors in the growing demand for an American home.

Low mortgage rates haven't hurt.

"While all real estate in the U.S. is local, the same is not true for property owners," quipped NAR President Vicki Cox Golder, owner of Vicki L. Cox Real Estate in Tucson, AZ.

"The U.S. continues to be a top destination for international buyers from all over the world. Foreign buyers understand the value of owning a home in this country," she added.

But not all U.S. real estate markets are created equal in the eyes of foreign buyers.

The survey found foreigners buying property in 39 states, but a bit more than half were in just four states: Arizona, California, Florida and Texas. Except for Texas, they are all states that were hotbed boomtowns during the last big boom.

By larger regions, foreign buyers favored the South (45 percent), over the West (32 percent), the Midwest (13 percent) and the Northeast (10 percent).

The buyers came from 53 countries, but the largest number was from just across the borders, Canada, at 23 percent and Mexico at 10 percent. The United Kingdom added 9 percent; China (including Hong Kong), 8 percent; Germany together with France, 7 percent; and India, 5 percent, according to the NAR survey.

More than one in three foreign buyers weren't closers. Thirty four percent had financing problems, often because tight fisted lenders weren't willing to lend to those without Social Security numbers.

But money talks. Among those who did close, 55 percent paid cash, compared to only 8 percent of U.S. buyers coming to the table with a full stake.

Other findings:

• The median price paid by international buyers was in the neighborhood of $219,400 during the 2009 to 2010 period. By contrast, the overall median price for all existing home sales was $173,000 during the same period. However, nearly half the foreign buyers, 46 percent, paid $200,000 or less during the period.

• Most foreign buyers, 66 percent, purchased a detached single-family home, compared to 23 percent buying a condo, 8 percent a townhouse and 3 percent commercial property.

• Fifty percent said they bought the property to live in as their primary residence, 22 percent as a vacation home; 14 percent as an investment and 14 percent as both an investment and vacation home.

• Suburban areas were most popular, chosen 50 percent of the time over urban areas (27 percent), resort areas (14 percent), and rural or small town areas (9 percent).

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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