International home sales in the U.S. declined in the past year, but are at their second highest level in recent years and are over six percent of total existing-home sales in value.
According to the National Association of Realtors 2013 Profile of International Home Buying Activity, interest in U.S. properties continues to grow, signaling that America continues to be regarded by international buyers as a great place to own property.
The survey, which asked Realtors to report their international business activity within the U.S. for the 12 months ending March 2013, showed that total international sales were $68.2 billion, down approximately $14 billion from the previous year.
The decline is attributed to a number of temporary factors, including economic slowdowns in a number of major foreign economies, tighter U.S. credit standards and unfavorable exchange rates.
Of total international transactions, $34.8 billion (51 percent) were attributed to foreign buyers with permanent residences outside the U.S. and $33.4 billion (49 percent) were attributed to buyers who are recent immigrants or temporary visa holders residing for more than six months in the U.S.
“Foreign buyers are experiencing hurdles not only abroad, but also here in the U.S. when it comes to purchasing property,” said NAR president Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif.
“Difficult economic conditions, particularly in Europe, have impacted foreign buyers, but several factors in the U.S. have also affected their purchasing power here. Tight credit standards have made financing challenging for immigrants, and low housing inventories have made finding a house difficult. However, none of these factors appear to be permanent.”
Foreign buyers continue to have a substantial interest in U.S. properties. Over a five year time frame more than 70 percent of Realtors reported a constant or increasing level in the number of international clients contacting them.
“Realtors provide international buyers with a significant advantage when purchasing property in the U.S. Realtors® who have earned NAR’s Certified International Property Specialist designation have received specialized training and are well prepared to service the international market,” said Thomas.
Twenty-seven percent of Realtors reported having worked with international clients this year. The most important factors influencing international clients’ purchases reported by Realtors were that the U.S. is viewed as a desirable location and that the real estate market is regarded as a profitable investment.
Realtors reported purchases from 68 countries, but five have historically accounted for the bulk of purchases; Canada (23 percent), China (12 percent), Mexico (8 percent), India (5 percent) and the United Kingdom (5 percent).
These five countries accounted for approximately 53 percent of transactions, with Canada and China the fastest growing sources over the years.
Canadian buyers were reported to purchase properties with a median price of $183,000, with the majority purchased in Florida, Arizona and California. Chinese buyers tended to purchase property in the upper price ranges with a median price of $425,000 and typically in California. Sixty-two percent of Mexican buyers purchased property in California and Texas, with a median price of $156,250.
Five states made up 61 percent of reported purchases; Florida (23 percent), California (17 percent), Arizona (9 percent), Texas (9 percent) and New York (3 percent).