Profile of International Buyers in US Real Estate
The majority of purchasers in the United States are still Americans but recently there has been a lot more competition.
According to National Association of Realtors recent report, in the time between April 2015 and March 2016, foreign investors purchased $102.6 billion worth of residential property and 214,855 properties. This was a slight decrease from the previous 12 month period where it had been $103.9 billion and 208,947 properties.
Who is Purchasing Property?
The countries that these investors live in that make up the bulk of the foreign investors include China, Canada, India, Mexico, and the United Kingdom. These five countries made up more than 50 percent of all international sales in 2016. In fact, they accounted for 51.3 percent with China leading the group with 26.7 percent.
Of course, there are many more countries investing in the United States right now but these are the main ones and have been for several years.
Where and Why Are They Purchasing
While you can find international investor deals happening in all states, there are some main ones that they tend to purchase in. The five main states that made up approximately 51 percent of international sales by location in 2016 include Florida, California, Texas, Arizona, and New York. These numbers only include residential property.
Some of the other key states that have a lot of international investment action include New Jersey, Illinois, North Carolina, Maryland, Georgia, Connecticut, Colorado, Michigan, Nevada, and Washington.
It appears that some of the main reasons that attribute to the specific locations in the United States include the location in terms of their home country, job and educational opportunities, climate, location, and the presence of friends, family, and even associates. Buys in Florida and Arizona tend to be from Europe, Canada, and Latin America because they are looking for warmer, more vacation friendly, climates.
Asian buyers tend to purchase in New York and California because of job opportunities, similarities in the culture, and the geographic location. A lot of Latin America investors look to Texas because it is fairly close to their home country. In general, however, most investors are looking for residential property for rental purposes.
How Much Are They Paying?
While they may have reasons for choosing specific locations for their purchases, when it comes to price, they tend to pay more than traditional purchasers in the United States. The prices also vary depending on the region.
On average, they have paid more than the average price of all existing homes that are sold in the U.S. When looking at numbers, they have paid $477,462 on average but the average price in the U.S. is $266,683. Not only that, about 10 percent of all foreign investors paid more than $1 million for the property of their choosing.
When you look at the residential property that has been purchased by this group, the numbers are slightly different. For these types of properties, the median amount paid is $277,380 but the median for all homes sold during the same time period in the U.S. is only $223,058. From these numbers, they are paying more for these homes than the locals are in the area.
It does look like the investment numbers have been slightly decreasing over the past year but they are still very high. The majority of purchasers in the United States are still Americans but recently there has been a lot more competition.