International View on U.S. Real Estate

Interest Has Declined But Hit Higher End
The National Association of Realtors recently released survey results indicating that U.S. home sales to international buyers have declined 9.4% in the past year. Though affordability is at an all-time high in some cases, foreign purchasers have struggled to fight through the world recession and the perception that the U.S. market has not stabilized.

When they have made purchases, however, almost half of the transactions have been in cash, as banks have imposed stricter guidelines on foreign applicants of home mortgages. The median home price is also higher (which is nothing new)—$247,100 for foreign purchases versus $198,100 domestically. Sales are expected to pick up again because of favorable exchange rates, loosening credit and the strong history of profitability of U.S. real estate.

Though some are beginning to fear China’s increased ownership around the U.S., that country rates only fifth in dominance, behind Canada at #1, the U.K., Mexico, and India. Also of note is that almost one out of every four foreign purchases occurred in the state of Florida.

Uvestor Opportunity:
Foreign investors seem to be willing to leave the fixer uppers to the U.S. investors who have more local connections with contractors who can turn around property conditions quickly and efficiently. Also, nearly a third of them are second home purchases or vacation getaways. Those high numbers of Florida sales are not taking place in the rural landlocked parts of the state by and large.

With fewer foreign investors, that leaves more for the domestic ones. Given that international buyers likely will return at some point in the near future, anyone looking to make purchase offers while some of them are away should do so soon.