The number of American homes bought by foreign nationals has nearly doubled in the past year as falling property values and record numbers of distress sales encouraged immigrants and foreign investors to take advantage of affordable prices. With home purchases by US citizens plummeting in the wake of the tax credit, foreigners are now poised to gain an even larger ownership share of the US residential market.
Foreign purchases accounted for about four and a half percent of all USA sales between April 2009 and April 2010, according to a new study by the National Association of Realtors. For the twelve months ending April 2010, foreign purchases of U.S. residences totaled $64 billion. This is almost twice the $36 billion in foreign transactions that took place during the twelve months ending April 2009. The percent of dollar volume represented by foreign transactions increased from 4.3% in 2009 to 7.1% in 2010.
About half of foreign bought properties were purchased as primary residences, and the rest as vacation homes and investment properties. Most bought properties in suburban locales and cities. Only 14 percent of foreign buyers bought in resort areas. Two factors important to international clients when purchasing property in the U.S. are proximity to their home country and the convenience of air transportation. Florida typically attracts European, Canadian and South American buyers while the East Coast draws Europeans. The West Coast brings Asian buyers and the Southwest attracts Mexicans.
Most of the foreign purchases were located in four states - Arizona, California, Florida and Texas. These four states accounted for 54 percent of all international transactions in the twelve months ending April 2010. This compares to only 38% of all foreign transactions in the twelve 13 months ending April 2007. States with a large number of distressed properties in vacation areas such as Florida and Arizona exhibited the biggest increases in foreign purchases. Foreign purchases in Florida and Arizona increased from 10 percent to 22 percent and 5 percent to 11 percent of all foreign transactions in the U.S. respectively 2007 and 2010.
Canadians and Mexicans accounted for a third of all foreign purchases. Purchases by British nationals and South Americans have been declining. The fourth largest source of foreign real estate buyers is now China, accounting for about 8 percent of foreign buyers in the first quarter of 2010. Most foreign buyers, 55 percent, paid all cash for their real estate.
Realtors participating in the study said that in addition to the decline in property prices, the declining value of the dollar has helped to make American real estate attractive to foreign buyers over the past year. The dollar has declined 16 percent against the Canadian Dollar, 11 percent against the Mexican Peso, and 8 percent against U.K. Pound between the first quarter of 2009 and the first quarter of 2010.