International buyers purchased $153 billion worth of existing homes in the U.S. from April 2016 to March 2017—up 49% from the same period a year before, according to a recent National Association of Realtors® survey. They bought 284,455 properties, a 32% increase from the previous year. My experience mirrors these numbers, I have found that one third of my showings are to potential buyers of foreign origins. Some are just moving to the US but the majority are second home buyers who are living the American dream and are buying up.
NAR surveyed nearly 6,000 Realtors® in the spring for the report. Foreign buyers are defined as those who don't live in the U.S. as well as recent immigrants who have been in the states less than two years or have been here on a visa for at least six months. Nonresidents made up about 42% of sales, while recent immigrants made up the remaining 58%. The report looked only at existing homes, and not newly built properties.
Who's dropping the most dough on U.S. real estate?
Chinese buyers spent the most on American real estate for the fourth year in a row. They dropped a whopping $31.7 billion, up 16.1% from the previous year. They also bought the most housing units, at 40,572, a nearly 39% year-over-year rise.
Our friendly neighbors to the north, the Canadians, spent quite a bit themselves—about $19 billion. This was more than double how much they dropped last year.
That's because the U.S. is still a bargain, with the average existing-home price of $287,500, compared with Canadian cities such as Vancouver and Toronto. Don't believe us? The average price in Greater Seattle is $483,400 compared with $700,380 in Greater Vancouver and $603,781 in Greater Toronto, according to the report.
Buyers hailing from the United Kingdom, Mexico, and India completed the top five, spending a respective $9.5 billion, $9.3 billion, and $7.8 billion. They were followed by buyers from Brazil, Venezuela, Germany, Vietnam, and Japan.
The largest share of foreign buyers—about 49%—are looking for homes to live in for most of the year, according to the NAR survey. Also, 18% are seeking investment properties and about 12% want vacation homes.
What kinds of homes do foreign buyers want?
American buyers shouldn't panic, though. Most foreign buyers aren't competing with locals as they're buying much more expensive homes. My experience has been in Birmimgham that foreign buyers are looking for million-dollar homes. Their looking for quality construction, up-to-date features and amenities, move-in-ready homes. They do not want to have to do any updates, repairs or modifications and they are hard negotiators.
Across the U.S. there are more sellers of luxury homes than there are buyers, you need only read the real estate section of the Wall Street Journal every Friday to see that homes that were built for millions are being offered for a fraction of their original cost.
You need to also recognize that our stock market has been on a growth pattern since 2009 and is due for a correction. If a 20% correction of the stock market along with The Baby Boomer Sell-Off and The Baby Boomer Die-Off should all come together the luxury home market could turn into a fire sale. Currently, in many Birmingham neighborhoods, less that 50% of the homes listed for over $750,000 will sell within 365 days of listing. If these three events sould come together this number could get worse.
This makes it of paramount importance that if you want to sell your luxury home today you must market your home like it’s a luxury automobile. Price it relative to the competition (visit the competition and see how your home compares), make it move-in-ready, market your home using conventional and social media, use professional photos and video, hire a salesman to sell you home.
I find the primary reason foreigners are moving to the U.S. is the opportunity that our system provides as well as our way of life. America’s still great and that's why their moving here.
Kerry Grinkmeyer is a real estate agent in Birmingham, AL specializing in the marketing and sales of luxury homes. Kerry's a retired financial advisor, he sold his firm, one of the largest in the Ameriprise Financial Advisor system in 2005 to his son, daughter and nephew. Now he's building one of the largest boutique real estate agencies that he'll eventually sell to his grandchildren. He the author of the children’s book The Christmas Web- A Family Christmas Tradition. Kerry competes in the Senior Olympics in to 50M, 100M and 200M dash as well as the 5k and 10k time trial cycling events.
Kerry offers you his financial background, knowledge of the community, love of business and family and energy to assist you in one of the most important financial decisions you'll make in your lifetime.
205 919 6006