International Investors Buying Second Homes in the U.S.

International buyers find U.S. real estate to be a good value for their money. While falling home prices and the weak dollar may have many Americans holding off on purchasing new homes, international investors are taking advantage of their increased buying power and the greater affordability and variety of available homes for sale in the U.S. real estate market.  In fact, foreign buyers account for a significant sales share of second homes in the U.S. according to the National Association of Realtors (NAR).

Price, Selection and Security Motivate International Investors to Buy Homes in America

NAR research revealed that nearly one out of every five REALTORS sold a home to an international buyer within the last year.  Another interesting statistic from the 2007 NAR Profile on International Buying Activity shows the median sale price of homes bought by international buyers was $299,500 - a full $77,600 more than the U.S. median sales price of $221,900 over the same period.   More than 20 percent of homes sold to foreign buyers were priced from $200,001 to $300,000, and 14 percent of international home buyers paid in excess of $750,000 for their piece of U.S. real estate.

Besides the fact that their money buys more home in the U.S. right now, foreign investors cite reasons for buying American homes that go beyond bargain hunting.  International investors see our country as a “safe haven” and are comfortable investing in real estate in the U.S. due to the stability of our political and economic climate.  The U.S. does not place restrictions on home purchases by foreign investors as some countries do, and international home owners enjoy the same property rights as American citizens.

Which parts of the world do these foreign investors call home?  A third of the international home buyers come from Europe, a fourth from Asia and another fourth from Mexico and Canada collectively.  Latin American buyers make up 16 percent of the total international home buying market.  Examining individual countries, the most foreign investors are from Mexico (13 percent), with the United Kingdom and Canada placing a close second and third with 12 percent and 11 percent respectively.

Where are international investors buying property?  A majority of international investors, 52 percent to be exact, bought their second homes in Florida (26 percent), California (16 percent) or Texas (10 percent).  Forty-seven percent of non-U.S. buyers said they purchased second homes as vacation properties.  Twenty-two percent made the purchase solely for investment purposes.  About a third of all international buyers said they bought a second home to be used both for vacation and as an investment.

In the next post, we’ll drill down and address why so many foreign investors buy vacation homes and investment properties in Florida.

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