Nearly one in five Realtors has sold a U.S. home to an international client in the past year, with the majority of those sales occurring in the Sun Belt states, according to new research by the National Association of Realtors.
The 2007 NAR Profile of International Home Buying Activity is the most comprehensive research that NAR has conducted to explore the characteristics of second-home purchases in the United States made by international clients. An international client is a foreign citizen living abroad who has legally entered the United States to purchase a home.
“In this country we have always known that housing is a good long-term investment, and many foreign buyers seem to share this view,” NAR President Pat V. Combs said in a prepared statement. “This latest study shows that more and more consumers from around the world are interested in purchasing a home in the United States for themselves, as an investment, or simply to enjoy a piece of the American dream.”
In 2006, most international home buyers purchased single-family homes or townhomes, and like most domestic home buyers, they financed their purchase. However, they showed stronger preferences for condos/apartments when compared to U.S. home buyers; 22 percent of international buyers purchased condos/apartments, compared with 12 percent of U.S. buyers. Twenty-eight percent of foreign buyers bought their houses with cash, compared with 8 percent of U.S. buyers. The median sales price of homes purchased by international buyers was $299,500, which is significantly higher than the U.S. median of $221,900 during the same period.
Forty-seven percent of all international buyers purchased homes exclusively for vacation, while 22 percent were motivated primarily by investment, the survey found. Nearly a third of foreign buyers cited both vacation and investment as reasons for their purchase. International homeowners spent an average of 4.2 months of the year in their U.S. property in 2006.
A third of all international buyers are from Europe, but buyers from Asia and North America (outside the United States) each represent about one-fourth of the total market. Sixteen percent of all international buyers are from Latin America. By individual country, most buyers come from Mexico (13 percent), the United Kingdom (12 percent) and Canada (11 percent).
Foreign buyers purchase homes across the United States, but 52 percent of sales in 2006 were concentrated in three states — Florida (26 percent), California (16 percent) and Texas (10 percent). The South attracted nearly half — 49 percent — of international buyers last year, while 31 percent purchased homes in the West.
Nearly a third of the Realtors surveyed worked with international clients or prospects during the previous year. Realtors who actually closed sales of homes to international clients reported an average of 1.9 clients, representing 15 percent of their annual business. Most Realtors reported a rise in sales to international buyers — 25 percent of Realtors had increasing business compared to five years ago, with another 67 percent reporting about the same level of international business; only 8 percent noted a decrease. A third of Realtors surveyed believe that foreign retirees will represent an increasingly important market for Realtors based in the United States.
“Just as many U.S. residents are looking overseas for retirement and second homes, people in other countries are considering a home in this country,” Combs said. “As international boundaries of home ownership dissolve, Realtors must stand ready to serve an increasingly diverse and multicultural marketplace.”