Even though mortgage interest rates are at historic lows, a 30% drop in pending home sales in May suggests that the spring spending spree that helped boost home sales 19.2% in a year may be over with.
However, even though much of that recent surge was because of the $8,000 tax credit that required buyers to be in contract for a home by April 30 to participate, plenty of buyers who couldn't qualify for the credit are likely to continue to shop in a market that boasts not only low interest rates, but also more affordable home prices. A new survey from the National Association of Realtors found that one group taking advantage of those perks is foreigners; 18% of its real-estate agents reported that they completed at least one sale with an international buyer in the past year, compared with 12% the year earlier
"The U.S. continues to be a top destination for international buyers from all over the world," said Vicki Cox Golder, president of the Realtors group. "Perceptions abroad about trends in the U.S. real-estate market have led many international clients to believe purchasing a home in the U.S. is more affordable than in their country and holds more value." Foreign buyers, including recent immigrants and temporary visa holders, made up only about 7% of U.S. transactions from April 1, 2009, to March 31, 2010, but more than half of those purchases took place in four states: Arizona, California, Florida and Texas, with Arizona and California the two most popular for the third year in a row.
The country with the largest number of buyers is our neighbor to the north, Canada, whose residents made up 23% of the international purchases in the past year. Meanwhile, our neighbors to the south in Mexico continued to increase their share of U.S. properties, taking the second spot with 10% as the United Kingdom's portion decreased to 9% from 10.5% the previous year. China took the fourth spot with 8%, but in all, international buyers in the past year came from 53 different nations, the survey found.
Although the share of sales to international buyers may be on the rise, with the Realtors group also stating that 28% of its agents reported working with at least one international client in the past year compared with 23% the previous year, the median price paid by a foreign buyer actually has decreased to $219,400 from 2009's median of $247,100. But despite the decrease in price, foreign buyers, who typically are buying a second a home, still dish out significantly more than the overall median U.S. market price, which was $172,500 in 2009. In addition, 16% of the total international purchases were for homes costing more than $500,000.
The survey also notes that condos are more popular among foreign buyers than among traditional U.S. buyers, making up 16% of international sales compared with 7% among Americans. More than half also paid all cash for their purchases, possibly because international financing can be difficult to obtain. Would you buy a home in a different country? Would you be more concerned with your enjoyment while vacationing at the home, or its value as an investment?