Photo: Foreign Real Estate Buyers on the Rise
Although many foreign investment companies have shied away from investing in U.S. real estate as a result of the housing market crash, many individual foreign investors are jumping at the opportunity to get a good deal on a house in the U.S. During a twelve month period beginning in March of 2010 and ending the following March of 2011, foreign clients bought $41 billion worth of real estate properties in the United States. This total rises to $82 billion if the investors with visas are also included. This number is up from $66 billion the year before.
The demand for homes has steadily increased and as a result the National Realtors Association offers an international version of their home listing website, thus making it even more convenient for foreign investors to ‘house hunt’ while abroad. “At a time when there are a lot of homes on the market and an overhang of distressed properties, an active foreign demand relieves these worries,” says Michael Fratantoni, vice president of research at the Mortgage Bankers Assn.
The popular destinations for many foreign investors, however, tend to lean towards the warmer regions of the country. Four states in particular have seen an increase in international purchases. Florida, California, Texas and Arizona are the top states in this category. This data doesn’t come as a complete surprise as many people prefer warmer climates, especially if the property will be used specifically for vacations and holidays.
Although purchases are occurring by buyers from all over the world, it may be surprising to hear that the highest percentage of international deals is Canadian. International real estate purchases by investors from Canada represented ¼ of all deals. Other popular countries are China at nine percent and India, Mexico, and Britain all at 7%. The majority of these deals are also paid in cash.
Although in the past many would have been nervous about this growing trend of foreign investment in U.S. real estate. However considering the current state of the U.S. housing market, many people are thankful for the interest. As a result, some in Congress are hoping to entice more international customers by sweetening the deal. Sens. Charles E. Schumer, a New York Democrat, and Mike Lee, a Utah Republican, have introduced legislation that would grant three-year visas to those who spend at least $500,000 in cash on at least one house. Senator Schumer stated, “This is a way of letting them live here and solving our housing crisis.”