International buyers scale back purchases of US homes

NAR: Economic conditions, tight financing and limited inventory dampen sales

Foreign buyers purchased a smaller share of U.S. homes sold in the year through March 2013 compared to the year before, according to an annual report from the National Association of Realtors.

An 11.5 percent drop in average sales price, to $354,193, coupled with fewer sales, resulted in a 17.4 percent drop in total sales dollar volume for international sales, to $68.2 billion, according to NAR’s 2013 Profile of International Home Buying Activity.

International sales accounted for about 6.3 percent of the $1.08 trillion in total U.S. existing-home sales, down from 8.9 percent in last year’s report.

North America image via Shutterstock.
North America image via Shutterstock.

“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 in a statement.

“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.”

About 16 percent of Realtors with international clients reported those clients did not complete a sale, down from nearly a third in last year’s report. The reason cited by 36 percent of respondents was the cost, taxes and insurance related to purchasing a U.S. property.

Nearly 3 in 10 said their clients “could not find a property to purchase.” Obtaining financing was a problem in 26 percent of cases, unchanged from last year. The majority of foreign buyers, about 63 percent, paid in cash, virtually unchanged from 2012 and 2011.

The median sales price of homes preferred by global buyers rose 9.5 percent from a year ago, and 37.9 percent from 2011, to $275,863. By comparison, the median sales price for U.S. existing homes overall — both domestic and international buyers — rose 5.8 percent from 2011 and 9 percent from 2012, to $179,867.

The report is based on surveys of 3,357 NAR members from April 9-May 10, 2013. International clients were divided into two groups: foreign buyers with permanent residences outside the U.S., and buyers who are recent immigrants of less than two years or temporary visa holders residing in the U.S. for more than six months.

In the year through March 2013, each group accounted for a nearly equal number of international sales, a total of 192,500, or 4 percent of overall home sales in that year. That’s down from 206,192 sales, or 4.7 percent of the total market in the last year’s report.

The share of Realtors who reported working with international clients — 27 percent — remained unchanged from last year. Of those Realtors, 7 in 10 reported working with five or fewer international clients who purchased U.S. property.

Four states accounted for 58 percent of international purchases in the U.S.: Florida (23 percent), California (17 percent), Arizona and Texas (9 percent each). California’s share of international purchases was up sharply from 11 percent a year ago.

NARIntlSalesbyState062513

Source: National Association of Realtors.

Five countries accounted for about 53 percent of international buyers: Canada (23 percent of international sales), China (12 percent), Mexico (8 percent), India and the United Kingdom (5 percent each). Overall, survey respondents reported purchases from 68 countries.

Just over half, about 54 percent, of international buyers purchased homes for $250,000 or less. That’s back to the level in 2011 and up from 45 percent last year when there seemed to be a trend toward higher price ranges. Among the five countries, Chinese buyers purchased homes with the highest median price ($425,000), followed by India ($300,000), the United Kingdom ($250,000), Canada ($183,000) and Mexico ($156,250), NAR said.

Nearly two-thirds of respondents, 64 percent, said their international buyers purchased single-family homes. About 42 percent of the homes purchased were intended as primary residences.

Just over half of respondents with international clients, 54 percent, reported their global buyers were referred from friends and previous clients as well as other foreign and domestic sources.

NARReferralMethodsforIntlClients062413

Source: National Association of Realtors.

About 23 percent obtained their international clients via websites and online listings, up from 20 percent in last year’s report.

“The growth of global listing portals may be a reason for the increase of clients obtained through website/online listings,” the report said. “For example, realtor.com, which launched an international site at the end of 2011, gained traffic in one year at the rate of around 1 million unique international users each month.”

Fifty-three percent of international clients said the most important factor influencing their purchase was their view that U.S. real estate was a “profitable” or “secure” investment. Thirty-nine percent said “desirable location” influenced their purchase the most.


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