Real Estate Monday: Foreign Buyers Love Florida

Foreign buyers find real estate in the Sunshine State a solid investment.

Foreign buyers find real estate in the Sunshine State a solid investment.

When it comes to real estate, foreign buyers are seeing the value in purchasing property in the United States.

And Florida is by far the most popular place for foreigners to invest.

Since 2007, the National Association of REALTORS® (NAR) has conducted a yearly survey to measure the level of sales of U.S. residential real estate to international clients. The survey provides information about the origin, destination, and buying preferences of international clients as well as the challenges and opportunities faced by REALTORS® in the international market. The 2014 Profile of International Home Buying Activity presents the analysis of data gathered from REALTORS® on purchases of U.S. residential real estate by international clients made during the 12 months ending March 2014. There were 3,547 respondents to the survey, conducted from April 14 – May 14, 2014.

The term international client refers to two types of purchasers of properties.

  • Type A, Non-Resident Foreigners: Foreign clients with permanent residences outside the U.S. These clients typically purchase property for investments, vacations, or visits of less than six months to the U.S.
  • Type B, Resident Foreigners: Clients who are recent immigrants (in the country less than two years) or temporary visa holders residing for more than six months in the U.S. for professional, educational, or other reasons.

For the period April 2013 through March 2014, the total sales volume to international clients (“international sales”) has been estimated at approximately $92.2 billion, a 35 percent increase from the previous period’s level of $68.2 billion.

 The dollar level of international sales was roughly 7 percent of the total U.S. Existing Homes Sales (EHS) market of $ 1.2 trillion for the same period.

 Compared to the previous year, sales to foreigners increased both in numbers of transactions and in average price. Of total international transactions, approximately $45.5 billion were attributed to Type A non-resident foreigners; and approximately $46.7 billion were to Type B resident foreigners.

Florida again topped the nation as the state of choice among international real estate buyers, capturing 23 percent of sales transactions in the latest yearly report from the National Association of Realtors.

China led the way, accounting for $22 billion in purchases of U.S. real estate for the 12-month period, or 24 percent of total foreign sales, NAR said. A year earlier, Chinese purchases of U.S. real estate amounted to $12.8 billion, or 19 percent of total foreign sales.

“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,” NAR president Steve Brown. co-owner of a Dayton, Ohio, brokerage, said in a statement.

 Among the Chinese, the favorite state remains California, which accounted for 35 percent of sales, followed by Washington (9 percent); New York (7 percent); Pennsylvania (6 percent); and Texas (6 percent.)

 In Florida, buyers from Asia accounted for just 8 percent of sales, while Latin Americans accounted for 26 percent of foreign purchases, and Europeans totaled 28 percent.

 However, Realtors say that Chinese buyers are showing increased interest in Florida and that they expect sales to increase in coming years as buyers flee an overheated Chinese market. Chinese investors are also being lured by EB-5 opportunities, in which they invest in projects in order to obtain citizenship. A majority of EB-5 projects have a real estate component, although mostly commercial such as hotels, restaurants and mixed use projects.

Chinese are also starting to show interest in high end condo’s and waterfront real estate, experts say.



Water Cooler Wednesday: Sobering Thoughts

After months of vibrant home sales nationwide, the National Association of Realtors came out with some sobering news this week. The sales of homes continued to slow in November, marking the third straight month of this trend.

And, while here at we’re not predicting, nor are we hoping for this trend to continue it may be time to consider why this is happening.

Some of the obvious reasons are the continuing increase in interest rates. There is also a tight and very limited supply of homes on the market, and it is still difficult for individuals with marginal credit scores to get a mortgage.

We’ve also heard on the street that banks continue to have “shadow inventory,” which refers to homes that are in various stages of the foreclosure process. Once they hit the market, expect the prices of homes to decrease due to increased inventory.

There have also been reports that foreclosures are decreasing. Some have said this decrease is simply because the courts are dismissing many cases due to “lack of prosecution.” They won’t appear “active” until they are re-filed. Keep in mind that banks may be delaying foreclosure proceedings because they don’t want the burden of taxes, insurance, and assessments.

These are just some of the factors that could jeopardize a true real estate recovery.  But, then again, if banks release these homes to the market, the good news is that home buyers may get a break in terms of lower prices.

What are your thoughts on this? Is the decrease in volume of sales just a blip or does it represent a trend leading to concern?