By Andrea V. Brambila
The state of the U.S. real estate market is in the eye of the beholder. While many Americans have shied away from home purchases due to the economic downturn, a growing number of cash-rich foreign investors are seizing the opportunity to snap up U.S. homes at bargain prices.
Not all U.S. markets are universally appealing to out-of-country investors, however. International homebuying activity is largely concentrated in a few areas of the country. Using public record data compiled by San Diego-based real estate data analysis firm DataQuick, Inman News has identified the 10 most popular areas in the U.S. for foreign homebuyers.
The majority of the markets, if not all, are recognizable as tourist destinations. Six of the 10 areas are in Florida; three are in the West (Arizona, Hawaii and Nevada); and one is in the Northeast (New York). No Midwest markets made the list
The 10 markets, ranked by highest share of foreign buyers, according to public records data, are:
- Lakeland-Winter Haven, Fla.
- Cape Coral-Fort Myers, Fla.
- Orlando-Kissimmee-Sanford, Fla.
- North Point-Bradenton-Sarasota, Fla.
- Miami-Fort Lauderdale-Pompano Beach, Fla.
- Phoenix-Mesa-Glendale, Ariz.
- New York County, N.Y. (Manhattan)
- Honolulu, Hawaii.
- Tampa-St. Petersburg-Clearwater, Fla.
- Las Vegas-Paradise, Nev.
Among the findings in this report:
–Population levels in the markets range from about 600,000 in Lakeland-Winter Haven to nearly 5.6 million in Miami-Fort Lauderdale-Pompano Beach.
–Seven out of 10 markets had foreign-born populations above the national rate of 13.1 percent in 2010. The Miami metro had the highest share born abroad, at 39.2 percent.
–In six of the 10 markets, area inhabitants who were foreign-born and moved from abroad accounted for a higher-than-average share of all inhabitants who moved, based on 2010 census survey data for people who moved during the prior 12 months. New York County had the highest share: 7.7 percent of the people who moved in that county were both foreign-born and hailing from abroad.
–In seven out of 10 markets, the median sales price for an existing, single-family home was lower than the national median of $163,500 in fourth-quarter 2011. In eight out of 10 markets, the median sales price for a condo was lower than the national median of $160,800 for that same quarter.
–Condo prices fell on an annual basis in the fourth quarter in seven out of 10 markets. All seven saw their prices decline by more than the national rate of -1.7 percent.
–Seven of the 10 markets had a higher share of distressed sales in fourth-quarter 2011 than the national rate of 23.7 percent. Eight of the 10 markets had higher foreclosure activity rates in fourth-quarter 2011 compared to the national rate.
–Nine of the 10 markets, except for Honolulu, had higher vacancy rates in 2010 than the national rate of 13.1 percent. Cape Coral-Fort Myers had the highest rate, at 37 percent.
U.S. real estate is in demand
Foreign buyers account for a small but growing segment of overall U.S. sales. Sales of U.S. existing homes totaled $1.07 trillion in the 12 months through March 2011, according to the National Association of Realtors’ 2011 Profile of International Homebuying Activity.
Of that $1.07 trillion, foreign buyers accounted for 7.7 percent, or $82 billion, up from $66 billion in NAR’s 2010 profile. Two groups accounted for about $41 billion each: foreign buyers with permanent residences outside the U.S., and buyers who are recent immigrants of less than two years or temporary visa holders residing in the U.S. for more than six months, according to NAR’s 2011 profile.
Demand for U.S. real estate from abroad has inspired some real estate companies, including Realtor.com operator Move Inc. and global franchisor Re/Max, to launch international versions of their real estate search sites.
Four states accounted for 58 percent of international sales in the year through March 2011, according to NAR: Florida (31 percent), California (12 percent), Texas (9 percent), and Arizona (6 percent). Other states corresponding to the markets on this list made up smaller shares of overall international sales: 3 percent in New York and 2 percent each in Hawaii and Nevada.
International buyers came from a total of 70 countries, NAR reported, and the top five accounted for 53 percent of transactions: Canada (23 percent), China (9 percent), the United Kingdom, Mexico, and India (7 percent each).
International buyers tend to have different motivations for buying U.S. real estate than domestic buyers. Foreign buyers are often limited to a six-month stay in the U.S. in any given year due to visa restrictions. In order to visit the U.S., foreigners must apply for either a B-1 visa for temporary business visitors or a B-2 tourist visa, both of which are typically limited to six months and may be issued for single or multiple entries.