by NAR

U.S. home sales by foreign buyers surge WASHINGTON – May 19, 2011 – The U.S. continues to remain a top destination for foreign buyers as international purchases surged by $16 billion this year – one of the highest increases in recent years – according to the National Association of Realtors®’ 2011 Profile of International Home Buying Activity.

According to the survey, total residential international sales in the U.S. for the year ending March 2011 equaled $82 billion, up from $66 billion in 2010. Total international sales were split evenly between non-resident foreigners and recent immigrants, while combined total domestic and international existing-home sales in the U.S. reached $1.07 trillion.

Florida had 31 percent of total international transactions this year, the most of any state. California had 12 percent, Texas had nine percent, and Arizona rounded out the top four with six percent of international transactions.

“The U.S. has always been a desirable place to own property and a profitable investment,” says NAR President Ron Phipps. “In recent years, we’ve seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory. In addition to the advantageous market conditions, Realtors in this country have a global perspective and experience in working with clients from different cultures and real estate practices, helping them bring value to their international clients.”

Historically, foreign buyers have been attracted to property ownership in the U.S. for a number of reasons. U.S. homes are generally less expensive than comparable foreign properties, homes in this country are viewed as a secure investment, and the U.S. market offers rental opportunities and long-term appreciation potential.

More recently, Realtors have noticed new factors motivating foreign buyers. Many U.S. colleges and universities have a significant number of international students, and some foreign families are purchasing U.S. properties in college areas so their child has a place to live. Another source of international demand is foreign executives temporarily working in the U.S., some of whom prefer to purchase a residence instead of renting.

“Besides the strength of the dollar and the general economic trends in the U.S., international buyers are also recognizing the benefits of homeownership in this country, especially in the case of recent immigrants,” says Phipps. “Many foreigners perceive owning a home here as an important accomplishment in their efforts to become established in this country.”

Recent international buyers came from 70 different countries, up from 53 countries in 2010. For the fourth consecutive year, Canada was the top country of origin, with 23 percent of sales to foreigners. China was second most popular, with nine percent of international sales this year. Tied for third were Mexico, the U.K. and India. Argentina and Brazil combined reported an increase in foreign sales with five percent, up from two percent in 2010. The top five countries of origin accounted for 53 percent of international transactions in 2011.

The average price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000. However, 45 percent of international purchases were under $200,000. This price segment has grown significantly over the years, most likely due to overall price declines in the U.S., as well as the strengthening of some foreign currencies.

Almost every state had at least one international transaction in the past year. The four states with the heaviest concentration of international buyer activity have remained the same over the past five years.

Foreign buyers are primarily interested in three factors when deciding where to buy in the U.S.: proximity to their home country, convenience of air transportation, climate and location. Generally, the East Coast attracts European buyers. The West Coast remains popular for Asian purchasers. Mexican buyers are traditionally attracted to the Southwestern markets. Florida is most popular among South Americans, Europeans and Canadians.

Similar to last year, 28 percent of Realtors in 2011 reported working with an international client. Fifty-five percent served at least one foreign client, while the bulk of international transactions were handled by a small percentage of Realtors. Only eight percent of members obtained 50 percent or more of their transactions from international clients.

Sixty-one percent of foreign buyers purchased a single-family home while 36 percent bought a condo/apartment or townhouse.

In addition, 62 percent of international purchases were reported as being all cash. This percentage is significantly higher than all-cash purchases for domestic buyers, mostly due to the differences in international credit reporting standards.

Financing challenges continue to be a major hurdle for international buyers, with 32 percent reporting these as their reason for not buying a home. Many Realtors reported that their foreign clients faced mortgage financing issues, as well as problems with legal, tax and immigration laws.

The Wall Street Journal, by Nick Tamiraos

Memo to sellers: you’ve got more competition this spring. Price those homes accordingly.

Nationally, the inventory of unsold homes on multiple-listing services increased by 0.6% in February from one month prior. Over the past year, inventory is up by 13%, according to Move Inc. The data covers all single-family homes, condominiums, and town houses listed on nearly all multiple-listing services across the country.

For the month of February, listings increased in 107 markets versus January, and they declined or stayed flat in 39.

Cities with the largest monthly declines in unsold homes listed for sale in February:

• Fort Lauderdale, Fla. (-12.5%)
• Riverside, Calif. (-8.7%)
• Tulsa, Okla. (-6.1%)

Cities with the largest monthly increases in unsold homes listed for sale in February:

• San Francisco (6.3%)
• San Jose, Calif. (5.5%)
• Boulder, Colo. (5.2%)

Inventories usually increase in February as more people test the market ahead of the busy spring home-shopping season. Over the past 27 years, the average increase in February has been 3.4%, according to research firm Zelman & Associates.

For the year, only seven of the 146 markets have posted a decline in home listings, including Orlando, Fla., and Jersey City, N.J. The number of homes available for sale in Reno, Nev., is 32% higher than year-ago levels, while Las Vegas and Naples, Fla., had nearly 23% more homes for sale in February than at the same time last year.

Unsurprisingly, the increase in inventory means that more homes are staying on the market longer.  The median number of days that homes were listed for sale in February, at 164 days, represents a 2.5% increase from January and a 29% increase from one year ago.

Meanwhile, average listing prices continue to fall, a sign that home prices are still falling across the country. Those listing prices were essentially unchanged from year ago but they were down 0.5% from the previous month, with big declines in Fort Lauderdale, Fla. (-8.6%), Honolulu (-5%), and Sacramento, Calif. (-2.5%).