Tuesday, December 2, 2008

Foreign exchange rates have helped make U.S. homes more affordable for international buyers

The weakening US dollar and declining home values are largely discouraging for Americans homeowners. For international real estate investors, however, such conditions present opportunity. The National Association of Realtors (NAR) recently released the 2008 NAR Profile of International Home Buying Activity.
The weakening US dollar and declining home values are largely discouraging for Americans homeowners. For international real estate investors, however, such conditions present opportunity. The National Association of Realtors (NAR) recently released the 2008 NAR Profile of International Home Buying Activity.
"NAR estimates that between 150,000 and 190,000 homes were sold to foreign nationals from May 2007 to May 2008," according to the NAR press release on the findings. "Recent foreign buyers purchased properties in every state and the District of Columbia. The most popular states where international buyers purchased homes are Florida, California and Texas. Arizona, New York, Washington and Nevada were also popular."
Nearly half of the properties purchased by foreign buyers were located in the Southwest; 45.7 percent of all property sales to foreign buyers occurred in Arizona alone.,
More than 45.7 percent of the estimated 150,000 to 190,000 sales to foreign buyers were in Arizona
"Foreign exchange rates have helped make U.S. homes more affordable for international buyers," according to NAR's press release. "The euro, for example, has strengthened 24 percent versus the U.S. dollar over the past two years. Home prices are also now more affordable in places such as Arizona and Florida, contributing to those states’ popularity among foreign buyers."
The typical foreign buyer bought a single-family home at $297,400, intended for use as a vacation home, where the buyer stayed 2.6 months of the year, according to the findings. 40 percent of foreign buyers made the purchase in cash, compared to just 7 percent of domestic home buyers who do so. In the previous report, which covered the period between April 2006 and April 2007, 28 percent of foreign buyers made their purchases in cash. This 12 percent increase in foreign buyers who purchased properties in cash can perhaps be attributed to the weakened U.S. dollar and sinking home prices across the country.
Nearly one quarter of investors purchased properties to use as rentals, the highest found in the report.
"People from North America, Europe and Asia accounted for more than 85 percent of recent foreign home buying transactions. The top six countries of origin for foreign home buyers, in rank order, were Canada, the United Kingdom, Mexico, China, India and Germany," according to NAR's press release. "This year, Canada replaced Mexico as the country with the largest share of foreign buyers in the U.S. The percentage of Canadian buyers doubled from last year, from 11 percent to 23.5 percent."