International Buyers Targeting the U.S. Real Estate Market

The U.S. real estate market is rife with international buyers looking for high returns on investments, but who specifically are these buyers? The spectrum is broad but there is some key data, such as country of origin, buying power, and interests that can be extrapolated to help you better understand your market.

International buyers in the U.S. come from over 70 countries, and accounted for more than $41 billion worth of existing home purchases between 2010 and 2011. According to the NATIONAL ASSOCIATION OF REALTORS® 2011 Profile of International Home Buying Activity, international purchases surged by $16 billion for the past year ending March 2011, fueled by low prices and plentiful inventory. With so many investors coming the U.S., the international demographic warrants careful consideration.

General Insights on International Buyers

Many international investors come from Canada and Mexico, and the top five countries (Canada, Mexico, China, the United Kingdom, and India) account for 53% of transactions. Fifty-eight percent of these transactions occurred in Arizona, California, Florida, and Texas. Major consideration factors in purchases included proximity to home country, convenience of air transportation, and climate and location. Similarity in climate and lifestyle of the investor’s home country also plays a major role. For example, Europeans are drawn to the East Coast, the West Coast attracts Asian purchasers, the Southwest market is attractive to Mexican buyers, and Florida is a destination for South Americans. This can be chalked up to word-of-mouth and the desire to be surrounded by culturally similar immigrant population.

Another demographic is one the U.S. knows well: snowbirds from Canada and Europe relocating to the warmer climes of Florida, the Southwest, and Hawaii, where the intended use of the property and expected yearly occupancy is limited to 6-month stays in the U.S.  In many cases, international buyers expect to use the property for vacation/rental purposes. In other cases, professionals temporarily in the U.S. for extended time period may plan on using the property year round, as would be the case for recent immigrants.

Key Points About International Buyers

  • Many Canadians are looking for investment or lakefront recreational properties.
  • Many international buyers work in the United States and bring their families to the U.S. from their country of origin after establishing work.
  • Some clients are parents of international college students getting their education in the U.S.  They purchase property for college residence and later investment purposes.
  • The U.S. is viewed as a very opportune place to start and grow a business, core property leases, etc., and investors from Singapore and China may be willing to buy in bulk.

Key Points About the International Market

  • Total purchases by foreign or foreign-born buyers in 2011 totaled $82 billion, $41 billion of which came from recent immigrants who had moved to the U.S. within the past two years.
  • Sixty-two percent of international purchases were reported as being all cash. This percentage is significantly higher than all-cash purchases for domestic buyers, mostly due financing challenges that continue to be a major hurdle for international buyers.
  • Seven of the top 10 international markets had foreign-born populations above the national rate of 13.1% in 2010. The Miami metro area had the highest share born abroad, at 39.2%.
  • In six of the top 10 markets, area inhabitants who were foreign-born and moved from abroad accounted for a higher-than-average share of overall inhabitants who reported moving in the previous year in 2010. New York County (Manhattan) had the highest share: 7.7% of the people who moved in that county were both foreign-born and hailed from abroad.

To further help you in the market, the Certified International Property Specialist (CIPS) designation arms REALTORS® with the tools to service the growing international market by providing education and resources to ensure that each and every transaction is smooth and profitable.

Are you seeing an increase in purchases by international buyers in your market? What are some insights you’ve picked up along the way? Tell us in the comments, below.