According to research data by NAR, 11% of all dollar value for home sales in the US are from international buyers. Transaction accounts for only 5% and this because they are buying expensive homes. These are wealthy people who buy 800,000 to 2 million dollar properties. Yet they want to have the confidence that the market is healthy and their value can appreciate. This is exactly what is happening in Florida and therefore we have seen, already in 2017, a strong trend of increase in global buyers. They are not affected by the climbing interest rates in the US because 73% of them buy cash. Only 21% of them get some kind of financing from US banks and the rest uses other financing sources.
They can therefore buy quickly and do better in a market with very little inventory like we have today. And they prefer Florida over other states. Texas comes second and California is their choice. In Florida the majority of global buyers come from Canada, UK, Germany and Latin America. UK buyers prefer the Orlando area, Germans gravitate toward Fort Meyers and Naples. Buyers from South America prefer Miami and finally Eastern Canadians like Tampa Bay and Sarasota. Western Canadians gravitate instead toward Las Vegas and Arizona.
Second Home Market Still Very Strong
In Florida most of the purchases are for second homes used for vacation purposes. In Texas and California most are related to job transfers or investment. Chinese buyers, which have been very strong so far in California, start now to look at Florida as a viable alternative because of the much lower prices.
These are all data coming from Realtors who have been directly surveyed by NAR and they refer to successful transactions. They have also collected information about unsuccessful transactions so to determine the reason foreign buyers would step away. The two key limiting factors that came up are: insufficient house selection and difficulty in moving money from abroad. This is specially true for China which imposes restrictions on capital transfer. Another key factor is US immigration laws. What is the solution? The inventory will probably increase with the constant rise of interest rates in the US. But we understand that in the future a successful global Realtor will have to master some aspects of the US immigration landscape as well as alternative ways to move money internationally like, for example, the growing phenomenon of cryptocurrencies.