News


Foreign buyers claiming 14% of home sales in California

Now account for $92.2 billion in U.S. sales, up from $68.2 billion year ago

Favorable exchange rates, affordable home prices and rising affluence abroad continue to drive international buyers to the U.S. to purchase properties and make real estate investments.

According to the National Association of Realtors 2014 Profile of International Home Buying Activity, for the period April 2013 through March 2014, total international sales have been estimated at $92.2 billion, an increase from the previous period's level of $68.2 billion.

"We live in an international marketplace; so while all real estate is local, that does not mean that all property buyers are," said NAR President Steve Brown, co-owner of Irongate, Inc. Realtors in Dayton, Ohio.

"Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability, and an incredible opportunity for investment in their future," Brown said.

International buyers and recent immigrants purchased homes throughout the country, but four states accounted for 55% of the total reported purchases: Florida, California, Arizona and Texas. Florida remains the destination of choice, claiming a 23% share of all foreign purchases. California comes in second with 14%, Texas with 12% and Arizona with 6%.

According to a real estate Web site, the top five cities searched online by international buyers in 2014 were Los Angeles, Miami, Las Vegas, Orlando and New York City.

Foreign buyers take many factors into consideration when deciding where to purchase abroad, such as proximity to their home country, the presence of relatives and friends, job and educational opportunities, and climate and location.

European buyers are generally attracted to states with warmer climates such as Florida and Arizona while the West Coast tends to attract Asian purchasers. Indian buyers tend to gravitate towards states that are home to large information technology companies, such as California, New York and North Carolina.

Within markets in an individual state, it is not unusual to find concentrations of people grouped by nationality, possibly indicating that word-of-mouth and shared experiences influence purchases.

Twenty-eight percent of Realtors reported working with international clients this year. International sales tend to be handled by specialists and only 4% of those who reported having an international client saw 11 or more international transactions in a year. Of those who reported having an international client, approximately 54% reported that international transactions accounted for one to 10% of their total transactions, a decrease from 2013 but still in line with past years' levels.

International buyers are more likely to make all-cash purchases when compared to domestic buyers. In 2014, nearly 60% of reported international transactions were all cash, compared to only one-third of domestic purchases.

Mortgage financing tends to be a major problem for international clients due to a lack of a U.S.-based credit history, lack of a Social Security number, difficulties in documenting mortgage requirements and financial profiles that differ from those normally received by financial institutions from domestic residents.

Most homes purchased by foreign buyers, about 42%, are used as a primary residence. Non-resident foreigners are limited to 6-month stays in the U.S., so these buyers largely use the property for vacation or rental purposes or as an investment. Approximately 65% of purchases involved a single-family home.

Nearly half of international clients preferred properties in a suburban area, about a quarter preferred a central city or urban area, and about 13% choose to purchase in a resort area.

International buyers come from all over the world, but those from Canada, China, Hong Kong, Taiwan, Mexico, India and the U.K. accounted for approximately 54% of all reported international transactions. Canada maintained the largest share of purchases, although dropping from 23% in 2013 to 19% in 2014.

However, China held the lead in dollar volume, purchasing an estimated $22 billion with an average sale cost of $590,826. China was also the fastest growing source of transactions, now accounting for 16% of all purchases, up 4% from last year. Mexico ranked third with 9% of sales and India and the U.K. both accounted for 5%.

"Foreign buyers who choose to work with a Realtor have a substantial advantage," said Brown. "Realtors who have completed the Certified International Property Specialist designation have received specialized training and are prepared to help clients with the unique difficulties of being an international buyer."

"CIPS designees understand the challenges buyers face when purchasing property in the U.S., and have the experience and expertise to help them navigate the complex, time-consuming and overwhelming world of international real estate," Brown added.

Comments

 +   Like this comment
Posted by Citizen
a resident of Another Pleasanton neighborhood
on Jul 23, 2014 at 9:16 am

"International buyers are more likely to make all-cash purchases"
US foreign aide!!


 +   Like this comment
Posted by The American Dream no more
a resident of Canyon Meadows
on Jul 23, 2014 at 9:58 am

SO sad that middle class Americans cant afford houses here but foreigners can


 +   Like this comment
Posted by Damon
a resident of Foothill Knolls
on Jul 23, 2014 at 10:07 am

@"American Dream" : "SO sad that middle class Americans cant afford houses here but foreigners can"

It's not a one-way street. Many wealthy and upper middle class Americans buy 2nd homes and retirement homes in other countries. If fact, I would bet that more Americans buy foreign property than foreigners buy American property.


 +   Like this comment
Posted by Sue
a resident of Valley Trails
on Jul 23, 2014 at 10:07 am

I would like to know what the term, "Single Family Dwelling" means? I have always understood it to mean, 1 single family - not a family with brothers, sisters, aunts uncles, nieces, nephews, cousins, brother - in - laws, sister - in - laws and grandparents all in the same house. A "Single Family Dwelling" should be just that, one single family. Husband, Wife and children if they have any. No wonder all the foreigners can come over and purchase a home - and usually with cash as they all pool their money and ALL live in the same house!


 +   Like this comment
Posted by Cholo
a resident of Livermore
on Jul 23, 2014 at 10:36 am

How can anybody be a "foreigner" if we're all born on the same planet and always have been?

A nuclear family is not the world ideal. Extended families are more common.

Not all American families are legally married even though children are present under that same roof. Not all American families are heterosexual but some may have children in the same household.

I've taken in old seniors who need a temporary home and at least one died in my home. We were not related.

In some instances, it's more economical to pay rent and not be bothered with various other expenses connected to home ownership.

GROW UP FOLKS!






 +   Like this comment
Posted by Cholo
a resident of Livermore
on Jul 23, 2014 at 10:58 am

The "American Dream" is being redefined. Many Americans but not all that work hard are able to purchase homes. Some relocate and live more within their means. Not everybody needs maids, a spacious yard/swimming pools, fur coats, ski trips abroad, 2,000 purses and 50,000 pairs of shoes...the latest fashion...NOT! not even a solid 24k gold toilet is necessary anymore!

The practical folks survive, live within their means, eat well, receive excellent medical care, participate in community/national political and extend a helping hand to others less fortunate, and enjoy this one time around life with family, friends, community.






 +   Like this comment
Posted by digitalFlack
a resident of Stoneridge
on Jul 23, 2014 at 11:08 am


Am I missing something?

This article says that 14% of the homes purchased in the United States by foreign buyers are in California. So, if 5,000 houses were sold to foreigners in the US, 700 were in CAlifornia

It does not say what percentage of houses sold in California are to foreign buyers.

Good writing would have made that clear. Instead, my neighbors are reading teh scary headline.


 +   Like this comment
Posted by kbenson
a resident of Bordeaux Estates
on Jul 23, 2014 at 11:19 am

With the influx of people coming to America from South America, I would think property in South America would be bargain priced. Dependent on the location, I would not mind living in oh say.... Costa Rica =)


 +   Like this comment
Posted by Cholo
a resident of Livermore
on Jul 23, 2014 at 11:27 am

What about Tulancingo, Mexico? Have you considered moving there? ...maids galore, cooks, garden sweepers, etc. etc. etc.

Tumbleweed Homes: way cute, affordable, and you can drag them around to your hearts desire...even as far away as Fargo, ND...Web Link

i rest my case...

just like Perry Mason


 +   Like this comment
Posted by digitalFlack
a resident of Stoneridge
on Jul 23, 2014 at 11:40 am



So, I went to the referenced National Association of Realtors 2014 Profile of International Home Buying Activity:

Numbers much less scary.

Of the $1.2 trillion sold in the previous four quarters, about 7% were sold to foreigners. Of those foreigners the statistics indicate 25% are Canadians and Brits buying vacation/retirement homes.

Doing the math on the Realtor website (without boring you) approximately 1% of housing sales in the US (last 12 months) were to foreign investors buying as investment. The rest were residences purchased by foreign residents (i.e. not naturalized people).

According to usGovInfo website 13% of the people in the United States were born abroad... some of them are getting enough money to buy a house now.

JF


 +   Like this comment
Posted by Henry
a resident of Pleasanton Valley
on Jul 23, 2014 at 1:05 pm

Migration has always been part of the human condition from the first Homo Sapiens leaving Africa 60,000 years or so ago. My parents came to the U.S. from Europe in the 1920s for economic reasons. A close relative emigrated to the U.S. as part of the Bering land bridge migration around 10,000 years ago. My parents sold their place up north and moved to South Texas on the border to have an inexpensive and rewarding retirement. Friends here in the Tri-Valley have retired to Peru, Ecuador, Costa Rica and Belize, using their home sale proceeds in the last year, all sales coincidentally to Asian migrants paying cash. People move. If the drought continues for another 5-10 years, we'll all become like the Okies of the Dust Bowl days. I only hope the borders are open to the south and north then so we can migrate to the water.


 +   Like this comment
Posted by Tom F
a resident of Castlewood
on Jul 23, 2014 at 1:11 pm

[Removed because it was irrelevant]


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