International buyers fuel US home sales

The number of foreign investors flocking to the U.S. is on the rise, driven by favorable exchange rates and affordable home prices, according to the National Association of Realtors® (NAR) 2014 Profile of International Home Buying Activity.

In the report released last week, NAR found foreign purchases of U.S. real estate surged in the 12 months ending in March to $92.2 billion, an increase of 35 percent over the prior period.

“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, in a statement. “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.”

China was the leader in dollar volume of international purchases, buying an estimated $22 billion with an average sales cost of $590,826, according to the report. China also was the fastest-growing source of U.S. foreign transactions, now accounting for 16 percent of all purchases, up four percent from last year.

Chinese buyers paid a median of U.S. $523,148 per transaction, compared to a U.S. median price of US $199,575 for existing-home sales.

Canada maintained the largest share of purchases, but its share is falling – 23 percent in 2013 to 19 percent in 2014.

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.

Additional findings from the report include:

• Twenty-eight percent of Realtors® reported working with international clients this year.
• International buyers are more likely to make all-cash purchases when compared to domestic buyers. In 2014, nearly 60 percent of reported international transactions were all cash, compared to only one-third of domestic purchases.
• Mortgage financing tends to be a major problem for international clients due to a lack of a U.S. based credit history, lack of a Social Security number, and difficulties in documenting mortgage requirements.
• Most homes purchased by foreign buyers, about 42 percent, are used as a primary residence.

“Foreign buyers who choose to work with a Realtor® have a substantial advantage,” said Brown. “Realtors® who have completed the Certified International Property Specialist designation have received specialized training and are prepared to help clients with the unique difficulties of being an international buyer. CIPS designees understand the challenges buyers face when purchasing property in the U.S., and have the experience and expertise to help them navigate the complex, time-consuming and overwhelming world of international real estate.”