Guess who is buying up property across the nation including Seattle real estate? People from other countries. International home buyers bought $66 billion of existing home sales during a recent 12-month period – about 7 percent of the residential market, according to a recent report.
The attraction to residential property in the U.S. seems to hover around several factors, including the strength of the dollar, everybody wants U.S. real estate, and the expected economic recovery.
Realtors across the country were asked about their experiences with international clients purchasing real estate. The survey, looked at two groups. The first group had permanent residences outside the U.S. but interested in purchasing U.S. property. The second group were people who were recent immigrants or temporary visa holders in the U.S. and looking for a primary residence.
These buyers came from 53 different countries, with the top four countries being Canada, Mexico, the U.K. and China/Hong Kong, which together accounted for half the buyers. With 23 percent of international buyers coming from Canada, the country has remained the largest buying group in the past three years. Foreign buyers from Mexico have been steadily increasing. In 2010 Mexico replaced the U.K. as the second largest buying group with 10 percent of buyers. Buyers from the U.K. decreased from 10.5 percent in 2009 to nine percent in 2010. Eight percent of recent buyers came from China/Hong Kong.
Two things are very important to international clients, proximity to their home country and the convenience of air transportation. The West Coast, including Seattle, draws Asian buyers and the Southwest attracts Mexican buyers. Florida typically attracts European, Canadian and South American buyers while the East Coast draws Europeans.
International buyers pay cash 55 percent of the time, whereas 92 percent of U.S. buyers finance their home purchase with a mortgage. This is the case for Seattle real estate purchasers as well.
Foreign buyers have incentives to buy real estate in the United States. Despite the recent issues in our housing market, we’re a relatively stable economy that has historically had steady appreciation and solid returns, and the changing dollar means other currencies have more buying power.
In the Puget Sound area, the relative strong job market including employers, Boeing, Microsoft and others, make our housing market attractive to foreign buyers.
Among other key findings in the report:
- The median price paid by international buyers was around $219,400. In contrast, the overall median price for existing home sales during 2009/2010 was $173,000.
- International purchasers prefer detached single family properties, with 66 percent of properties purchased being this type. By a wide margin, compared to domestic buyers, international buyers purchased more condos (23 percent versus 7 percent).
- International buyers were reported in 39 states, with four states (Florida, California, Arizona and Texas) claiming 53 percent of their purchases.
- International buyers are split between intended use of the property as a vacation home/investment home and as a primary residence.
- About half the international buyers chose a home in the suburbs. Homes situated in central city/urban areas accounted for 27 percent of the sales, followed by resort area at 14 percent and small town/rural area at 9 percent.
- Nearly half (45 percent) of foreign purchases occurred in the South. The West claimed 32 percent of the sales, followed by the Midwest (13 percent) and Northeast (10 percent)
- “Desirable location” is the dominant reason buyers cited for purchasing property in the U.S. Approximately three of every 10 buyers (29 percent) mentioned “profitable investment” as their most important issue, with 18 percent saying “secure investment” was paramount.
The saying that “all real estate in the U.S. is local”, the same is not true for property owners. The U.S. continues to be a top destination for international buyers from all over the world.
Seattle Rattle Blog 