The numbers are in, and non-U.S. citizens continue to pour money into real property purchases. According to the National Association of Realtors®, international purchases of residential property are up by $16 billion over the equivalent period in 2009-2010.
This is according to the NAR’s 2011 Profile of International Home Buying Activity. According to the report, total residential international sales in the U.S. for the past year ending March 2011 equaled $82 billion, up from $66 billion in 2010.
In past blogs I have discussed the importance of foreign buyers to the greater Phoenix metropolitan area. I also predicted that foreign sales of domestic real estate would increase. These latest numbers show I was right in believing that the U.S. market would become increasingly attractive to international purchasers.
The reasons given in the study for the increase are no surprise, and include low prices and plentiful inventory. This is particularly true in the Phoenix area, where home values by and large have declined to approximately 1999 levels. For residents of those countries where urban real estate is traditionally highly priced, the bargains in our local real estate market are increasingly attractive.
When declining prices are combined with greater purchasing power, demand by nonresident foreigners is guaranteed. For the past 10 years, the value of the euro has in general increased relative to that of the U.S. dollar. Due to the nature of international currency markets, when the dollar depreciates against the euro it also tends to depreciate against other currencies. As a result, foreign buyers get more for their money here.
For the fourth year in a row, Canadians bought more U.S. properties than the citizens of any other country in the U.S. last year, with staying consistent at almost one-quarter of the real estate purchased. China has muscled Mexico out of the way for second on the list, with our southern neighbor now being tied for third with the United Kingdom and India.
Florida leads the country in states attracting the most foreign investment with 31% of foreign purchases. Like last year, Arizona ranks fourth with international buyers at 6 percent, behind California (12%) and Texas (9%).
Foreign buyers have traditionally been a significant part of the residential market in Arizona. In this difficult market, an Arizona seller should market its property to more than the Phoenix metropolitan area market. Due my Canadian heritage and advanced legal and real estate education (I have been awarded the Certified International Property Specialist designation), I understand the complexity of cross-border purchases and know how to appeal to the foreign investor.