Five countries accounted for more than half of all international property purchases in the United States in the 12 months ending March 2015, with China overtaking Canada as the leading nationality for the first time.
Total unit sales from international homebuyers decreased from last year, however total sales dollar volume increased by 13 percent according to the National Association of Realtors (NAR) 2015 Profile of Home Buying Activity of International Clients.
For the period of April 2014 through March 2015, total international sales were estimated to be worth US$104 billion, compared to the previous year’s estimate of US$92.2 billion. This represents 8 percent of total existing-home sales dollar volume.
NAR Chief Economist Lawrence Yun (pictured) said: “During 2014, sales transaction to buyers outside of the U.S. dropped by 10 percent, possibly due to the strengthening of the U.S. dollar in relation to international currencies and a weakening of foreign economies’
“However, the amount of money spent has increased; this means international purchasers in the U.S. have become an upscale group of buyers, spending more money on fewer homes.”
In 2014, just five countries accounted for 51 percent of all purchases by international buyers: China, Canada, Mexico, India and the United Kingdom. For the first time, buyers from China exceeded all other countries in terms of units purchased and dollar volume, purchasing an estimated US$28.6 billion worth of property. Buyers from Canada followed with US$11.2 billion in purchases, followed by India with US$7.9 billion, Mexico with US$4.9 billion and the U.K. with US$3.8 billion.
International buyers tend to purchase properties that are more expensive, with the average purchase price being US$499,600 compared with the overall U.S. average house price of US$255,600, according to NAR. Chinese buyers typically purchased the most expensive properties, at an average price of US$831,800.
Some 35 percent of real estate agents reported working with an international client in 2014, up from 28 percent in 2013. About 46 percent of reported international transactions were intended for primary residences, 20 percent for residential rentals, and 26 percent for investment rentals, vacation homes or both.
Global buyers also purchased properties for commercial rentals and as residences for children studying in U.S. educational institutions. Indian buyers were the most likely to purchase a primary residence (79 percent), while Canadian buyers were most likely to purchase property as a vacation home (47 percent).
While international buyer clients purchased property across the nation, four states accounted for half of all international sales: Florida, California, Texas and Arizona. Florida remains the top destination for international buyers, claiming a 21 percent share of all foreign purchases. California comes in second with a 16 percent share, Texas with 8 percent and Arizona with 5 percent.
Chinese buyers tended to gravitate towards the West Coast, which provides ample education, business and trade opportunities, while Canadians seeking winter vacation opportunities focused on the Southwest and Florida.
The majority of international purchases (55 percent) were made with all-cash, compared to about 25 percent of all purchases made by domestic buyers.
Mortgage financing tends to be an issue for non-resident international clients because of a lack of a U.S. based credit history or social security number, difficulties in documenting mortgage requirements, and financial profiles that can be different from those normally submitted to financial institutions by domestic residents.
“Working with a realtor gives buyers from across the globe a considerable advantage,” said NAR President Chris Polychron, Executive Broker with 1st Choice Realty in Hot Springs.
The National Association of Realtors is ‘The Voice for Real Estate’ and is America’s largest trade association, representing one million members involved in all aspects of the residential and commercial real estate industries.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
