If you think that all real estate, like politics, is local, think again. Foreign buyers are increasing their purchases of properties in the United States. Between April 1, 2009 and March 31, 2010, they spent over $66 billion on residential property in the US, or 7% of the market.
Foreign buyers include people who reside outside the United States, recent immigrants, and temporary visa holders.
The most recent information on international purchases in the United States housing market from the National Association of Realtors shows that just four states account for over half of the sales.
Florida, with 22% of the sales, and Arizona (11%), have been the top two markets for foreign real estate buyers for the past several years. California moved into the second spot in 2010 with 12% of the transactions, while Texas (7%) saw a slight drop in sales compared to the previous year.
Canadians accounted for 28% of US home sales to foreign buyers in 2010, followed by Mexico (10%), the United Kingdom (10%), and China/Hong Kong (8%).
Foreign buyers tend to make their purchases in areas that are most convenient to their home countries. International clients in Florida are usually European, Canadian and South American, while the East Coast draws Europeans. Mexicans tend to buy homes in the Southwest, and Asians purchase residences on the West Coast.
Why does it make good business sense for a realtor to market to these buyers?
A survey conducted by the National Association of Realtors found that 55% of foreign buyers paid cash in 2009. While lending is still tight for many people interested in purchasing a home, international clients may not need a mortgage at all. In Florida, over 80% of international buyers paid in cash.
Many foreign buyers in Florida make their check these guys out purchases quickly and sight unseen. They are looking for a return on their investment so they may buy multiple properties to rent out.
Two thirds of the residences purchased by foreign buyers were detached, single family homes. Targeting a new demographic may be a competitive advantage in markets where sales of single family homes are slow.
On Realtor.com, website traffic from outside the US increased by more than 50% over the past two years. New features are being added to the website, including translation services, to help foreign buyers find real estate. It also plans to add index non-US listings to the site.