Falling Home Prices Ignite Boom in Foreign Buyers

I was just reading an article about foreign buyers literally invading the US to buy homes and I thought you’d like to see it if you haven’t already. It’s written by Steve Cook of Real Estate Economy Watch:

The number of American homes bought by foreign nationals has nearly doubled in the past year as falling property values and record numbers of distress sales encouraged immigrants and foreign investors to take advantage of affordable prices. With home purchases by American citizens plummeting in the wake of the tax credit, foreigners are now poised to gain an even larger ownership share of US properties.

Foreign purchases accounted for about four and a half percent of all USA sales between April 2009 and April 2010, according to a new study by the National Association of Realtors. For the twelve months ending April 2010, foreign purchases of U.S. residences totaled $64 billion. This is almost twice the $36 billion in foreign transactions that took place during the twelve months ending April 2009. The percent of dollar volume represented by foreign transactions increased from 4.3% in 2009 to 7.1% in 2010.

About half of foreign bought properties were purchased as primary residences, and the rest as vacation homes and investment properties.  Most bought properties in suburban locales and cities. Only 14 percent of foreign buyers bought in resort areas. Two factors important to international clients when purchasing property in the U.S. are proximity to their home country and the convenience of air transportation. Florida typically attracts European, Canadian and South American buyers while the East Coast draws Europeans. The West Coast brings Asian buyers and the Southwest attracts Mexicans.

The link to the original article is here.

It’s an interesting read and while it somewhat reflects what is happening here in Central Florida, the availability of money for loans and mortgages remains grim. Cash buyers are scoring some great deals at the moment and I expect that trend to continue for quite a while yet.

In my book “What You Must Know About Buying Your Vacation Home” I talk about why vacation properties are still great investments and it’s absolutely true about residential property still being a good way to build wealth providing you buy right.

The one thing I find  interesting is that most lenders have stopped lending to foreign nationals yet they still continue to buy in some volume. Imagine what might happen if one or two of lenders decided to lend again to foreigners instead of retreating into their Government sponsored safe hole. Maybe, just maybe, we’d see more distressed real estate purchased and that would then help values go up and the economy to recover faster? Just a thought.

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