One of the most obvious antidotes to the United States’ housing woes is an increase in household creation — and it doesn’t matter all that much who comprises those households.
Another obvious antidote is for more investors to enter the market with plans for earning rental income for an extended period of time. That trend will keep the sales inventory low, which helps stabilize prices.
So a hearty welcome to the growing numbers of Canadians, Chinese, Mexicans, and other foreign nationals who see the United States real estate market as a good place to invest their money. Apparently, favorable exchange rates and solid fundamentals are luring a larger number of investors, second-home buyers, and retirees from other countries.
From the WSJ’s Foreigners Snap Up Properties in the U.S.:
International buyers accounted for $82.5 billion, or 8.9%, of the $928 billion spent on residential real estate in the 12-month period that ended in March, according a survey released Monday by the National Association of Realtors. That was up 24% from $66.4 billion in the previous-year period.
The survey showed that about 55% of all international buyers came from five countries: Canada, China, Mexico, India and the United Kingdom. Five states, meanwhile, accounted for around 55% of all sales to international buyers: Florida, California, Texas, Arizona, and New York. The survey found that 62% of international buyers paid in cash.
Canada sends us 24% of foreign buyers, with China (11%), Mexico (8%), India (6%), and the U.K. (6%) coming next.
Florida is the location of choice for 26% of buyers (apparently they’re snapping up condos in Miami), with California (11%), Arizona (7%), Texas (7%), and Georgia (4%) next.
39% of international buyers plan to use the properties as their permanent residences, while 23% plan vacation homes. 17% will be used for residential rentals.
According to the NAR:
The average price paid by an international buyer was $400,000 compared to the overall U.S. average of $212,000. Several reasons account for why the average international home price is higher than the average overall price. The international client is typically wealthier than the domestic buyer and is looking for a property in a specialized niche, for example, a larger property suitable for multi-generational living, or a property that establishes the individual’s presence and standing in the community.
This is all good news.