WASHINGTON – June 19, 2015 – In 2014, U.S. foreign homebuyers purchased fewer properties year-to-year, but they spent 13 percent more money on the transactions they chose, according to the National Association of Realtors® 2015 Profile of Home Buying Activity of International Clients.
"In 2014, sales transaction to buyers outside of the U.S. dropped 10 percent, possibly due to the strengthening of the U.S. dollar in relation to international currencies and weakening foreign economies," says NAR Chief Economist Lawrence Yun. "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."
Florida continues to lead the U.S. in total unit sales to foreign buyers, but its numbers dropped a bit in 2014, according to NAR. One in five foreign buyers (21 percent) bought a home in Florida, compared to 23 percent one year earlier.The number is down from a 2011 peak of 31 percent.
The change, in part, results from a change in the makeup of foreign buyers. While Canadians tend to favor the Sunshine State, the weak Canadian dollar has made Florida purchases relatively more expensive for them. In addition, Chinese demand has skyrocketed, though the Chinese tend to pick locations along the Pacific Coast.
In 2014, 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, buying an estimated $28.6 billion worth of property. Buyers from Canada followed with $11.2 billion in purchases, followed by India with $7.9 billion, Mexico with $4.9 billion and the U.K. with $3.8 billion.
For the period of April 2014 through March 2015, total international sales were estimated at $104 billion, compared to the previous year's estimate of $92.2 billion – 8 percent of the total U.S. existing-home sales dollar volume.
International buyers tend to purchase more expensive properties with the average purchase price being $499,600, compared to the overall U.S. average house price of $255,600. Chinese buyers typically purchased the most expensive properties, at an average price of $831,800.
Thirty-five percent of Realtors 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 Florida remains the top destination for international buyers, California comes in second with a 16 percent share, Texas with 8 percent and Arizona with 5 percent.
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.
"Realtors who have completed NAR's Certified International Property Specialist designation have obtained specialized training and are best prepared to help clients with the unique challenges of being an international property buyer," says NAR President Chris Polychron.
NAR has posted the free 2015 Profile of Home Buying Activity of International Clients on its website.
© 2015 Florida Realtors®
Reprinted with permission. Florida Realtors®. All rights reserved.