Foreign Buyers Show New Interest In U.S. Homes

Having no luck selling your house? Maybe you should run an ad in a Canadian newspaper, or one in China, or Abu Dhabi.

While many U.S. consumers can't get financing or lack interest in owning a home, foreign buyers are showing new interest in the U.S., according to the National Association of Realtors (NAR). The group's annual survey shows $82 billion in international purchases of U.S. homes in the 12 months ending in March 2011. That's up from $66 billion in the previous 12 months.

“The U.S. has always been a desirable place to own property and a profitable investment,” said NAR President Ron Phipps. “In recent years we have seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory.”

Many reasons for new interest

Historically, NAR says foreign buyers have been attracted to property ownership in the U.S. for a number of reasons. U.S. homes are generally less expensive than comparable foreign properties, homes in this country are viewed as a secure investment, and the U.S. market offers rental opportunities and long-term appreciation potential.

Now, there are even more reasons. Home prices have fallen sharply from their highs reached in the bubble days. At the same time, the dollar has fallen sharply against other major currencies, making U.S. homes purchased with dollars even cheaper.

Homes have gotten so cheap for many foreign buyers that they are snapping up bargains in university towns to house their children, who are attending school in the U.S. Another source of international demand, according to NAR, is foreign executives temporarily working in the U.S., some of whom prefer to purchase a residence instead of renting.

Where to look

So, if you would like to tap the international market, where should you be looking for buyers? NAR says recent international buyers came from 70 different countries, up from 53 countries in 2010.

For the fourth consecutive year, Canada was the top country of origin, with 23 percent of sales to foreigners.

China was the second most popular country of origin, with nine percent of international sales this year. Tied for third were Mexico, the U.K., and India. Argentina and Brazil combined reported an increase in foreign sales with five percent, up from two percent in 2010. The top five countries of origin accounted for 53 percent of international transactions in 2011.

Florida a favorite

Foreign buyers like Florida property. Thirty-one percent of international real estate transactions last year were in the Sunshine State. California had 12 percent, Texas had nine percent.

Oh, yes, finding an international buyer might mean doing a little better at closing. The average price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000, according to the survey.

However, 45 percent of international purchases were under $200,000. This price segment has grown significantly over the years, most likely, NAR says, due to overall price declines in the U.S. as well as the strengthening of some foreign currencies.