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September 2014

Home sales to International Buyers top $92 billion

By NWREporter

September 2014

Sales of U.S. homes to foreign buyers jumped 35 percent last year, with Chinese buyers accounting for nearly one-fourth of the total dollar volume for that cohort.

In its 2014 Profile of International Home Buying Activity, the National Association of REALTORS® said the value of homes sold to foreign buyers totaled $92.2 billion, the highest level in at least four years. The report reflects activity for 12 months ending in March 2014.

The rise was led by Chinese buyers, who accounted for $22 billion - or 24 percent - of that total, up from $12.8 billion in last year's report. That represents a 72 percent year-over-year increase.

NAR attributed the surge in international activity to favorable exchange rates, affordable home prices and rising affluence abroad. Its research indicates 28 percent of its members reported having international clients. Only four percent had 11 or more international transactions in a year, indicating that international sales tend to be handled by specialists, NAR said.

Other findings from the report include:

  • Foreign sales represented about 7 percent of the $1.2 trillion market for existing homes during the same time period.
  • About 60 percent of purchases by foreigners were all-cash deals.
  • Sales split approximately 50/50 between resident and non-resident foreigners.
  • Four states made up 55 percent of the total reported purchases by foreign buyers: Florida (23 percent of purchases), California (14 percent), Texas (12 percent) and Arizona (6 percent)
  • Five countries (Canada, China, Mexico, India, U.K.) accounted for 54 percent of foreign sales.
  • Canadians bought the highest number of homes, accounting for 19 percent of residences sold to foreigners. That's down from 23 percent a year earlier as U.S. home prices rose from a 2012 post-housing-bubble low and the Canadian dollar weakened.
  • Chinese purchases were concentrated in higher-priced markets such as California, Washington and New York, while Canadians bought in lower-priced Florida and Arizona, favoring popular getaways from their winter weather. Chinese buyers paid a median of $523,148 per home, which compares to $212,500 for Canadians.
  • About 42 percent of homes purchased by foreign buyers are used as a primary residence. (Non-resident foreigners are limited to 6-month stays in the U.S., so their purchases tend to be used for vacation or rental purposes or as an investment.)

NAR also noted international buyers typically purchased higher-priced homes, paying a median price of $268,000 compared with a median $200,000 for U.S. existing homes as a whole.

"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. In a statement with the report, he also said 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."

The NAR report was based on a survey of 3,547 REALTORS polled from April 14 to May 14.