International buyers — foreign citizens who legally enter the United States to purchase a home — are making up a growing share of business for real estate practitioners, according to new research by the NATIONAL ASSOCIATION OF REALTORS®.
NAR’s 2007 Profile of International Home Buying Activity shows that a quarter of REALTORS® report more international business in 2006 than five years ago. Nearly one in five respondents sold a home to an international client in the past year, and one-third say they believe foreign retirees are an increasingly important market in the United States.
“Just as many U.S. residents are looking overseas for retirement and second homes, people in other countries are considering a home in this country,” says NAR President Pat V. Combs. As international boundaries of homeownership dissolve, you must stand ready to serve an increasingly diverse and multicultural marketplace, she adds.
The research explored the characteristics of second-home purchases in the United States made by international clients. Here are six of the top findings, which reveal important trends that will help you tap into the expanding international niche:
- Stronger preference for condos and apartments. In 2006, most international home buyers purchased single-family homes or townhomes, and like most domestic home buyers, they financed their purchase. However, they showed stronger preferences for condos/apartments when compared to U.S. home buyers; 22 percent of international buyers purchased condos/apartments, versus 12 percent of U.S. buyers.
- More pay in cash. Twenty-eight percent of foreign buyers bought their houses with cash, compared to 8 percent of U.S. buyers.
- Purchase pricier homes. The median sales price of homes purchased by international buyers was $299,500, which is significantly higher than the U.S. median of $221,900 during the same period.
- Homes used for vacation, investment. Forty-seven percent of all international buyers purchased homes exclusively for vacation, while 22 percent were motivated primarily by investment. Nearly a third of foreign buyers cited both vacation and investment as reasons for their purchase. International homeowners spent an average of 4.2 months of the year in their U.S. property in 2006.
- Buyers from Mexico most prevalent. A third of all international buyers are from Europe, but buyers from Asia and North America (outside the United States) each represent about one-fourth of the total market. Sixteen percent of all international buyers are from Latin America. By individual country, most buyers come from Mexico (13 percent), the United Kingdom (12 percent) and Canada (11 percent).
- Florida leads the pack. Foreign buyers purchase homes across the United States, but 52 percent of sales in 2006 were concentrated in three states: Florida (26 percent), California (16 percent), and Texas (10 percent). The South attracted nearly half – 49 percent – of international buyers last year, while 31 percent purchased homes in the West.
For more information, visit NAR’s International department on REALTOR.org.
— REALTOR® Magazine Online