Rich Foreigners Loaded With Cash Take Aim at U.S. Real Estate
The real estate market is booming — depending on who you ask. Many Americans are too worried about how to earn a decent living these days to even consider buying a house, but rich foreigners loaded with cash see the current U.S. housing market as open hunting season.
A combination of favorable exchange rates, attractive house prices, and rising affluence abroad are inviting international homebuyers to America. Between April 2013 and March 2014, foreigners purchased $92.2 billion of U.S. real estate, up 35 percent from the previous period’s level of $68.2 billion, according to the National Association of Realtors. In fact, 28 percent of realtors reported working with international clients this year. Nearly 60 percent of reported international transactions were all cash, compared to only one-third of domestic purchases.
“We live in an international marketplace; so while all real estate is local, that does not mean that all property buyers are,” said NAR President Steve Brown, co-owner of Irongate, Inc. Realtors in Dayton, Ohio. “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.”
Five countries accounted for 54 percent of all reported international transactions: Canada, China, Mexico, India, and the United Kingdom. Our neighbor to the north maintained the largest share of purchases at 23 percent, but China held the lead in dollar volume, purchasing an estimated $22 billion with an average sale cost of $590,826. China was also the fastest growing source of transactions, accounting for 16 percent of all purchases, up 4 percent from last year.
International buyers and recent immigrants purchased homes throughout the country, but four states accounted for over half of the total purchases. Florida was the destination of choice, accounting for 23 percent of all foreign purchases, followed by California (14 percent), Texas (12 percent), and Arizona (6 percent). The most popular cities searched online by international buyers in 2014 were Los Angeles, Miami, Las Vegas, Orlando, and New York City.
“Foreign buyers take many factors into consideration when deciding where to purchase abroad, such as proximity to their home country, the presence of relatives and friends, job and educational opportunities, and climate and location,” explained NAR, in a press release. “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 towards states that are home to large information technology companies, such as California, New York, and North Carolina.”
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