26 | BUSINESS USA Viewpoint WORDS | NAR


BUSINESS


www.opp.org.uk | AUGUST 2010


Why Foreign Investors are Buying in the U.S.


In our latest monthly update from the States, the National Association of Realtors takes a look at who is moving in and who is moving out. And where do American buyers like to invest when they leave the USA?


U.S. HOUSING INDICATORS


US investors, where they come from


Month Canada Mexico UK


China/Hong Kong


Germany/ France


India Russia


Argentina/ Brazil


Source –NAR – June 2010


If we include clients who are recent immigrants or temporary visa holders in the USA, foreign investors comprised 7% of the U.S. residential market, spending a total of $66 billion. So what is the draw? “Several factors have contributed


T


to an increase in international buyer interest in the U.S.,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox Real Estate in Tucson, Arizona.


“Changes in the value of the U.S. dollar have had a strong impact on the international real estate business. Also, perceptions abroad about trends in the U.S. real estate market have led many international clients to believe that purchasing a home in the U.S. is more affordable than in their own country


he numbers prove it: the US real estate market is a good buy for foreign investors.


Median price 23% 10% 9% 8%


7%


5% 3%


2%


Home Median Price Month


Febuary March April May


Year-over-year change (May 2009 to May 2010)


Volume sold $164,600


$169,600 $172,300 $179,600


2.7%


Housing Starts (New Construction Homes) – May 2010 (seasonally adjusted annual rate of sales) 593,000


and that it holds more value.” International buyers came from a total of 53 different countries around the world. The top four countries were Canada, Mexico, the U.K. and China/ Hong Kong. With 23% of international buyers coming from Canada, the country has remained the largest buying group for the past three years. Foreign buyers from Mexico have


been steadily increasing too. In 2010 Mexico replaced the U.K. as the second largest buying group with 10% of buyers.


Buyers from the U.K. decreased


from 11% in 2009 to 9% in 2010. Interestingly, 8% of recent buyers came from China/Hong Kong. Two factors remain the most important to international clients when purchasing property in the USA: proximity to their home country and convenience of air transportation.


2010 U.S. Existing-


Florida typically attracts European, Canadian and South American buyers while the East Coast draws mostly Europeans. The West Coast brings Asian buyers and the Southwest attracts Mexicans.


Looking Out ... The U.S. perspective of the global market Overseas property markets


are increasingly attractive to American buyers looking for a lower cost of living.


“In my opinion, retirees are attracted to markets like Costa Rica, Panama and the Dominican Republic for the low cost of living and taxes,” said


“Stabilising prices and low mortgage rates are encouraging buyers to enter the market.”


Isabel Bianchi, a realtor from Florida. But most American clients tend to stay closer to home – Canada and Mexico account for nearly half of the 500,000 to 600,000 Americans who own homes abroad. Most of these are purchased as second homes. According to NAR, roughly 370,000 to 440,000 of these homeowners have a principal residence in the U.S.


According to NAR U.S. existing- home sales remained at an elevated pace in May. Existing-home sales were at a seasonally adjusted annual rate of 5.66 million.


While sales were down 2.2% from April, they remained up 19.2% on May 2009. Buyer response to the home


buyer tax credit, stabilising home prices and low mortgage rates continue to demonstrate a strong pace to the domestic market. NAR President Vicki Cox Golder believes that prices are also stabilising. “This is a hopeful sign indicating that the U.S. real estate market can stand on its own and does not need additional government support,” she says. “These prices, as well as low mortgage rates, are continuing to encourage buyers who are sitting on the sidelines to enter the market.” The national median existing-


home price for the month of May was $179,600, up nearly 3% from a year ago. Single-family home sales rose from a year ago in 18 out of 20 metro areas and prices rose in 16 out of 20 areas. The West and South experienced higher sales while the Northeast saw a decline; Midwest sales remained steady. In a separate report, NAR’s Pending


Home Sales Index (PHSI) declined 30% in May after the home buyer tax credit expired (April 30th 2010 was the deadline for qualifi ed home buyers to sign a contract for purchase). The PHSI is a forward-looking


indicator that refl ects signed home sales contracts.


The US Market Report chaired panel session takes place in the OPPLive conference programme at 13.30 on Thursday October 14 2010.


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