Economist's Commentary: June 27, 2008
International Homebuyers Survey: A Preview
By Keunwon Chung, Statistical Economist
A forthcoming report based on a survey of approximately 4,400 Realtor® members will present detailed information on purchases of U.S. real estate by foreign citizens. The importance of international real estate purchases is increasing. Given increasing international trade, it is not surprising to find increased foreign interest in the purchase of U.S. real estate.
The survey found that a typical international buyer purchased a single family home for vacation purposes at $297,400 with mortgage financing, and stayed at his/her U.S. property for 2.6 months. At first glance, this seems rather similar to domestic buyers, but in fact international buyers are quite different from domestic buyers.
The median price for a property purchased was reported as $297,400, which is a lot higher than the $219,000 median price of existing home sales in 2007. Over 14 percent of properties sold to international buyers were in excess of $750,000.
Close to half of all international buyers paid in cash, unlike domestic buyers: this broke down to 43 percent of international buyers vs. 3 percent of domestic buyers . Although the majority of the properties sold to international buyers were single-family homes (which accounted for 75 percent), international buyers showed a stronger preference for condos and town houses compared to domestic buyers; 25 percent of international buyers purchased condos/apartments, versus 12 percent of U.S. buyers.
The largest group of buyers came from North America (33 percent), followed by Europe (31 percent) and Asia (22 percent). For individual countries of origin, Canada, the U.K., Mexico, China, and India ranked among the top five. The most popular U.S. destinations for the purchase of property were Florida, California, Arizona, and Texas.
According to the survey, 26 percent of the respondents had served international clients in the past 12 months. Approximately half of the clients subsequently purchased real estate properties in the U.S. When clients did not make a purchase, the survey respondents mentioned cost of property (54 percent), immigration laws (27 percent), and property taxes (24 percent) as being the major reasons behind their decision.
Realtors® with international clients on a median basis allocated 20 percent of their work to international transactions. However, concentration on the international market was relatively limited. For example, only 8 percent of the 26 percent of respondents with international clients (equivalent to 2 percent of all Realtors®) spent more than 50 percent of their time on international transactions.
Regarding the trend of international business, 21 percent of respondents have experienced an increase in international business, 72 percent have seen the level of international business remain constant, but only 6 percent experienced a decrease. The majority of respondents selling international properties noted that the weak U.S. dollar had impacted foreign sales purchasers.
A complete report will be issued in approximately six weeks.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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