Free WordPress Themes


US Buyers

Property in the U.S. continues to draw buyers from other countries as prices, exchange rates, and safety of investment add up to a value proposition.

According to the ‘2014 Profile of International Home Buying Activity’ issued by the National Association of Realtors (NAR), foreign buyers of U.S. property spent USD 92.2 billion from April 2013-March 2014.

That represents a sizable increase from the previous year’s total of USD 68.2 billion. As NAR President Steve Brown says, “We live in an international marketplace; so while all real estate is local, that does not mean that all property buyers are.”

Brown, the co-owner of Irongate, Inc. Realtors® in Dayton, Ohio, adds, “Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability, and an incredible opportunity for investment in their future.”

While sales to international buyers take place around the country, four states attracted 55 percent. Florida led with 23 percent; California was second with 14 percent followed by Texas with 12 percent, and Arizona with 6 percent.

More than half of the buyers come from five countries – Canada, China (including Hong Kong and Taiwan), Mexico, India, and the UK – out of 61 total countries. Canada was first with 19 percent although less than its 23 percent in 2013.

China in second place at 16 percent of transactions was the fastest growing, up 4 percent from 2013.  Chinese buyers also spent the most, estimated at $22 billion and individual sales averaging USD 590,826. Mexico was third with 9 percent. India and the UK each accounted for 5 percent.

Among NAR’s more than one million membership, the great majority of property agents never meets an international client. In the past year only 28 percent of agents sold a home to a foreigner while just 4 percent handled more than 11 foreign clients. However, 20 percent of the property agents consider that the market trend for such buyers is moving up; 6 percent say it is declining.

Sellers and property agents favor international buyers who are more likely to pay cash: 60 percent of purchases by foreigners this year were for cash compared to 33 percent of purchases by domestic buyers. Most Americans require mortgage financing which is much more difficult for everyone than it was before the financial crisis but especially for international clients.

Typically, lenders ask for a U.S. credit history, Social Security number, and several years of bank statements; they question the source of deposits larger than $1,000. This can be hard for Americans to produce and often impossible for foreigners. Mortgages are available to those international clients who have been doing business in the U.S. for several years and can produce a record of tax payments to the Internal Revenue Service and relevant state tax collectors.

Foreigners who spent a total of USD 6.4 billion for homes in Florida are led by Canadians used to flying down for beach vacations during the colder months and accounting for 30 percent of international transactions in 2014. South Americans from Venezuela, Brazil, Argentina, Colombia, and Peru have been replacing some European buyers from the UK, Germany, and France. The number of buyers from China (including Hong Kong and Taiwan) in Florida has been increasing although most still prefer California.

Going forward, the popularity of Florida with international buyers is likely to continue. Vani Ungapen, Director of Global Business and Legislative Research for Florida Realtors, notes that a recent study by Florida Tax Watch predicted USD 20.37 billion from 60,369 international housing transactions over the next two years.

That doesn’t surprise Ungapen. She considers Florida “truly a global state with 19.2 percent of its population being foreign born and over 27 percent of Florida residents speaking a language other than English.”

Moreover, Florida hosts more than 300 regional and hemispheric headquarters of companies from around the world including 16 Fortune 500 companies. These business centers are served by hundreds of airports for general or private aviation as well as commercial services.

Ungapen points out that Florida’s airports offer “numerous direct flights to all key Latin American and Caribbean destinations, most major European cities, and one-stop air services to the Asia/Pacific region.” More direct flights connect Florida with Latin America and the Caribbean than in all other U.S. states combined. “We feel that for these reasons,” she concludes, “the international interest in the state will continue to grow.”

If Florida is the favorite state for international home buyers, the favorite city is Miami. Six years after the crash in condominium construction, parts of Miami’s skyline are filled with cranes. Unlike in Dubai a few years ago, the current construction boom is not for office buildings but for condominium towers with flashy apartments.

“Miami is the sweetheart of the world,” said Jorge Perez, Chairman and CEO of the Related Group, one of the city’s signature builders, at the June opening of the pre-sales center for the SLS Lux Brickell condominium. At that time, the building already had USD 200 million in pre-sale reservations – half of total sales in the project – and Perez acknowledged, “everyone wants a place here.”

Everyone also remembers what happened in 2008 when most buyers left deposits of 20 percent behind and walked away from new condominiums whose value plummeted. But today is different. It’s no longer easy to borrow money, and developers and bankers have learned a lesson.

Pre-sales in Miami today are based on at least 50 percent down meaning that developers collect the money to finish the hard costs of the project before they break ground. If the money isn’t there, they won’t start. Since foreigners continue to put money down, the boom goes on. Most domestic buyers cannot afford prices from USD 600 – 2000 per square foot. One penthouse at Miami Beach’s Faena House lists at USD 50 million.

In Downtown Miami, Brickell, Miami Beach, and sections of Coconut Grove and Coral Gables, 40 condominium projects with close to 6,800 units are under construction; 56 with almost 11,000 units are undergoing the approvals process; and 36 with more than 8,300 units are proposed in early stages, according to Peter Zalewski, a principal at, the Miami firm that tracks condominium development.

These new condominiums tend to be much more expensive than the ones completed in 2008-9. “Everyone is doing buildings with amenities and toys that just blow away the buildings that went up last time,” explains Gil Dezer, president of Dezer Development. His 60-story Porsche Design Tower in Miami Beach will have parking outside each apartment – cars will be delivered by automatic lifts. Most balconies will have private swimming pools.

Another super luxury feature is art. SLS Lux will be the home of a huge sculpture by Colombian master Fernando Botero. The Muse condominium near the Porsche Design Tower has hired Albanian architect Helidon Xhixha to create an individual sculpture for each apartment’s owner, and many buildings will have art galleries.

One result of the super luxury condominium boom is increased competition among real estate agents. Sales commissions from developers typically run from 4-5 percent and up. Today developers are providing incentives as high as 7 percent to property agents and brokers outside the U.S.

“It’s a go-to market, not a come-to market,” says Lewis M. Goodkin, President of Goodkin Consulting, who has been analyzing Florida real estate for a long time. “They are really doing a lot of selling overseas and paying brokers overseas.”