Florida property purchases by non-resident foreigners reached US$7.97billion in the year to June 2014, up from US$6.43billion the year before, with Canadians making up a third, says the NAR
Affordable property has helped foreign real estate purchases in Florida rise by almost US$1.5billion in the year to June 2014, a new report shows.
Florida real estate purchases by non-resident foreigners in the year to June 2014 is estimated at US$7.97billion, compared with US$6.43billion in June 2013, says the National Association of Realtors (NAR) and Florida Realtors.
Almost a third (32%) of purchases were made by Canadian buyers, followed by buyers from Western Europe, including the UK, France and Germany, at (24%), buyers from Latin America/Caribbean, mostly from Brazil and Venezuela, at (23%) and Asian buyers at 10%, dominated by buyers from China at 6%, rising from 1% just a few years ago.
International sales accounted for 10% of Florida’s residential market, 1% more than last year and around a quarter of foreign home buyers in the United States purchase property in Florida, says the NAR Profile of International Home Buyers in Florida 2014 report.
The number of purchases made by non-resident foreigners is estimated at 26,500 units, up from 22,600 units, based on July 2013-June 2014 data of closed sales and mean prices for single-family homes and condo/townhouses.
Nationally, international home buying activity of non-resident foreigners was estimated at $ 46.7billion from April 2013-March 2014 according to NAR’s 2014 Profile of International Home Buying Activity.
More buyers are purchasing property either for rental alone or both for vacation and rental purposes, with 24% purchasing it for rental purposes alone, up from 14% in 2008.
Florida’s sales to non-resident foreigners are estimated at US$7.97billion, accounting for 17% of non-resident foreigner sales.
“The increase in international home buying activity was driven by the continued recovery of the world economy and the affordability of US properties. Both US and Florida residential prices remain affordable to most international homebuyers. In fact, international clients continued to purchase properties that are on the average above the mean price paid by domestic buyers.”
Three-quarters (76%) of Florida Realtors believe their clients find Florida property less expensive than similar property in their home countries and the weaker US dollar helps overseas buyers, say 85% of respondents.
“The value of the US dollar versus a prospective buyer’s respective home country currency contributes to the buying decision when considering international real estate. A weaker US dollar means that the foreign buyer’s money goes farther in the US, thus effectively making US real estate less expensive for the foreign buyer than would otherwise be the case.
“Results from this year’s survey indicate a decline in the share of international clients coming from Venezuela, possibly due in part to the steep depreciation of the Venezuelan bolivar,” the survey says.
Sales to non-resident international clients were spread across a number of major areas, led by Orlando-Kissimmee and Tampa-St. Petersburg-Clearwater (all at 11%), Miami-Miami Beach (10%), and Bradenton-Sarasota-Venice and Fort Lauderdale (8%).
Significantly, more than half of Florida agents (52%), around twice the national average of 28%, have international clients and 29% have increased their percentage of overseas business in the last five years, compared with 20% nationally
Most (81%) Florida agents have up to five international clients. Almost one in five (19%) have six of more international clients, compared with 12% nationally, and 20% say that foreign clients account for more than a quarter of their business, 5% more than the national average.
“Florida is reported to have a strong growth potential for attracting international clients. noted by Realtors who have been successful in dealing with international clients, understanding the culture, concerns and language of potential foreign clients, reaching out through personal contacts and online tools, and assisting potential foreign buyers through the regulatory and financial process are important, especially for agents on the buy-side of the transaction. Realtors also noted that the relaxation of visa restrictions pertaining to the length of stay would attract additional international clients.”
Florida’s location is the most important factor influencing a client’s decision to purchase Florida property, say 59% of the survey’s 1,886 Florida Realtor respondents, 20% more than national average in NAR’s 2014 Profile of International Home Buying Activity.
More respondents say profitability of Florida real estate is the major factor affecting their purchase decision, which supports the assertion that more buyers are purchasing property for rental purposes.
Referrals from previous clients/friends/business contacts and online marketing are the important sources of contacts, say agents.
Although retirees accounted only for a 6% of purchases by foreign buyers, around half of the Florida Realtors reported retirees as potential buyers.
About half of foreign buyers in Florida bought a detached single-family home compared with 80% of domestic buyers. Foreign buyers are more likely to purchase condominiums and townhouses/row houses, since the owners are not staying at their property all year round.
Nine out of 10 of foreign buyers who purchased a home in Florida bought an existing home, slightly higher than the national average of 86% reported in NAR’s 2013 Profile of Home Buyers and Sellers.
All-cash sales to foreign buyers were reported by 82% of Florida Realtor, with the use of mortgage financing less frequent at 15% compared with the overall national average of 88%, which appears to be due to differences in credit reporting between the US and foreign countries, and difficulties in confirming credit worthiness internationally, says the NAR.
The full NAR Profile of International Home Buyers in Florida 2014 report can be downloaded from the Realtor.org website.
By Adrian Bishop, Editor, OPP Connect