- International investors have always been attracted to the quality and stable fundamentals of U.S. commercial properties.
- After the 2008-09 recession, the percentage of cross-border investments in U.S. markets has risen from six percent in 2009 to 10 percent in 2011*.
- In comparison, 20 percent of Realtors®’ sales of commercial properties were made to international clients and investors, according to the 2012 Commercial Lending Survey.
*Source: Real Capital Analytics
Sales of U.S. residential real estate to foreigners not residing in the U.S. continue to be in the 2 percent range. Other NAR surveys have indicated that an additional 2 to 3 percent of residential sales are made to international customers residing in the U.S. Additional information on international activities is available at http://www.realtor.org/research-and-statistics/research-reports/international-real-estate.
According to the latest Realtors® Confidence Index survey, on average international sales are 2.5 percent of the market by volume, and have been running in the 1.5 to 3.5 percent range over the past several years. Prices for international sales tend to be significantly higher than the U.S. median price.
What does this mean for Realtors®? International sales are a specialized niche, requiring specific expertise. If you have a listing of interest to a potential international client, some of the information at http://www.realtor.org/global may be of interest.
In a recent report, “The 8th Annual Demographia International Housing Affordability Survey,” which referenced NAR’s housing data, the authors look at housing affordability in 325 metropolitan markets in Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom and the United States.
The survey showed that housing affordability is highest among U.S. markets. Following the U.S. are markets in Canada and Ireland. The United Kingdom, Australia and New Zealand rank as the least relatively affordable markets.
- The market share of vacation- and investment-home sales held steady in 2010, although the sales volume declined with the overall market according to the 2011 Investment and Vacation Home Buyers Survey.
- All-cash purchases have become prevalent in the second-home market in recent years: 59 percent of investment buyers paid cash in 2010, as did 36 percent of vacation-home buyers.
- Among investment buyers who did use a mortgage, 50 percent financed less than 70 percent of their purchase.
- The 2011 Investment and Vacation Home Buyers Survey can be downloaded here: http://www.realtor.org/prodser.nsf/Research
According to the Genworth International Mortgage Trends Report, consumers are more worried about personal finances than their countries’ economies.- Across the countries surveyed, over 40% of all respondents felt negative about their economy while 75% were concerned about their personal finances.
- India and Mexico were the most optimistic about their countries’ economies and personal finances, while Italy and Ireland were among the most concerned.
- For all eight countries surveyed a rise in the cost of living and rising petrol prices dues to unrest in the Middle East were the top two concerns, with the exception of Mexico. The top concern for Mexico was the rate on unemployment.
- Download the Genworth International Mortgage Trends Report here.
- According to NAR’s 2011 Profile of International Home Buying Activity, fifty-five percent of Realtors® with international clients indicated that at least one client did not a purchase property.
- Financing problems appeared to be the major reason by international clients for not purchasing property: problems associated with verifying credit worthiness and problems with international transfers of funds were major issues with negative impacts on financing.
- “Could not find a property” accounted for 31 percent of failed transactions and may have indicated buyer problems in understanding the differences between U.S. and foreign cultures and business conditions.
- Realtors® may find that some of NAR’s information on cross cultural real estate transactions may be of help in facilitating purchases.
- The importance of contacts was mentioned by many survey respondents as reported in NAR’s 2011 Profile of International Home Buying Activity.
- Realtors® reported that 53 percent of clients were referred to them through friends, previous clients, and international referrals.
- According to NAR’s 2011 International Survey, international purchasers came from 70 countries in the 2010/11 time frame.
- The three major areas originating international purchasers are Asia, North America, and Europe. Canada, China, Mexico, India, and the U.K were produced the majority of international buyers.
The French Election & US Mortgage Rates
With a win by the socialist party in France’s presidential election, bond investors will be shifting money into U.S., U.K. and Germany. That means lower mortgage rates, at least temporarily, for U.S. consumers.
The 10-year borrowing rate for German bonds fell and now stands at 1.58%. By contrast, the French government has to pay a 2.78% interest rate. The comparable U.S. and U.K. borrowing rates are 1.86% and 2.00%, respectively.
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