SCOTTSDALE, Ariz. - (Business Wire) Nearly 31 percent of foreign buyers of U.S. properties have come from Europe so far this year; Canada and Mexico (North America) came in second with 28%; and Asia third, with 25%. “The USA a melting pot for foreign investors,” said the National Association of Realtors (NAR) President Richard Gaylord. While international buyers purchased properties in most of the 50 states, the Sunbelt States accounted for the bulk of their purchases: Arizona, California, Florida and Texas. “Many international buyers recognize that real estate is an excellent investment and are drawn today by abundant inventory, low interest rates and favorable foreign exchange rates,” said Gaylord. Aside from these short-term, but viable reasons, the U.S. offers a climate that suits all tastes and needs and is filled with tourist areas that provide a strong rental market. The U.S. is a secure and politically stable country, which means a transparent and straight-forward buying process, superior building standards and a high quality and standard of living, and it is easily accessible from anywhere in the world. Also, English is the official language international buyers readily understand.
According to Patrick LaVoie with The Westward Fund, “A U.S. real estate purchase is one of the most exciting investment opportunities available today, for both national and international investors. The focus of investors is always on the bottom line. The unprecedented buying opportunities that currently exist, combined with careful property selection, provide investors an opportunity for outstanding returns, particularly in the Sunbelt States.”
In a survey of 200 members of the Association of Foreign Real Estate Investors (AFIRE) conducted in October 2008, 53% said the U.S. continues to provide the most stable and secure real estate investment environment, and with 37% of the vote, the U.S. was ranked as the country providing the best opportunity for capital appreciation. Respondents overwhelmingly pointed to the U.S. as the primary target for their real estate investment dollars and said that an average of 45% of their portfolio is invested in the U.S.
Foreigners are good for business
According to the 2009 NAR Profile of International Home Buying Activity, 12.5% of U.S. realtors have seen an increase in foreign clients within the past year and 23 percent reported having at least one foreign client during the year. "People are looking to diversify their investments. Buying power has increased tremendously," says Rick Wohlfarth of Wohlfarth & Associates, one of New York's leading boutique real estate brokerage firms. Wohlfarth travels regularly to Brazil to link buyers to properties ranging in price from $5 million to $15 million. Foreign buyers make up about 20% of his sales.
The most popular type of property purchased by international buyers is single family homes, accounting for 69% of all purchases. Condominiums make up 18%. Townhomes and commercial properties account for smaller shares of international purchases, 9% and 4%, respectively.
In terms of motivation, according to NAR’s Profile, 34% of international buyers purchased a U.S. residential property for a vacation home, while slightly more than 18% planned to use the property strictly for investment (rental) purposes. Nearly 25% of all foreign buyers purchased a U.S. property for both vacation and investment purposes.
Canadian snowbirds flock to USA for more than just fun in the sun!
Canadian buyers accounted for 18% of all international real estate purchases in the U.S. Nearly 60% of the properties purchased are in Florida and Arizona.
“The double-whammy of falling U.S. real estate prices and a rising Loonie has created a once-in-a-lifetime bargain for Canadians looking for property in the U.S. Sunbelt States,” says Bank of Montreal Chief Economist Sherry Cooper. She goes on to say, “I love the Canadian dollar at parity. We are truly richer, as the money we earn and the money we invest is worth more.” (The U.S./Canadian exchange rate on October 23, 2009 was 1.0654.)
Mark Dziedzic, a former financial planner from Toronto who now lives in Arizona, says, "When (the Canadian dollar) hit $1.10, it really created a real buzz for Canadians, not only those looking to buy second homes but we are also seeing it from buying purely from an investment standpoint.” Sixty percent of Canadians purchased a U.S. property as a vacation destination; 12% bought as an investment; and about 16% purchased a home for both vacation and investment purposes.
“The time is ripe, especially for private equity, to capitalize on the real estate opportunities at hand,” states Patrick LaVoie, with Phoenix-based The Westward Fund. “Foreign investment has an undeniable presence in the U.S. real estate market, especially here in Arizona. Opportunities are abundant. Now is the time to buy and our Canadian friends clearly recognize this.”
Only time will tell, but when it comes to foreigners investing in U.S. real estate, the focus is on one word only: Opportunity.
Niche Focus Group
Troy Bohlke, 480-656-0560
troy@nichefocusgroup.com
