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California Sees Rise in International Buyers, but Credit Crunch Hampered Their Buying

Wednesday, September 16, 2009

Next to Florida, California saw a notable rise in foreign interest as affordability conditions improved markedly in the state last year, according to the 2009 National Association of REALTORS® Profile of International Home Buying Activity.

"California has a very diverse population, and as such, has always been a choice for international homebuyers," said Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS® and a REALTOR® with Alain Pinel Realtors in Palo Alto.

Dave Tonna, a REALTOR® with Alain Pinel Realtors in Los Gatos, agreed and noted he is currently working with a prospective home buyer from Belgium.
Cupertino is another neighborhood in the region that has been known to attract international homebuyers because of the excellent school district, according to
Carolyn Miller, a REALTOR® with Re/Max Real Estate Services in Cupertino.

National Association of REALTORS® chief economist Lawrence Yun said, "Florida is the most popular state for European and Latin American buyers, while Asian buyers are drawn to California."

In the 12-month period between the end of May 2008 and the end of May 2009, foreign buyers were active in every state and the District of Columbia, with the most popular states being Florida, which accounted for 23 percent of all foreign purchases; California, 13 percent; Texas, 10.7 percent; and Arizona, 7.1 percent. These states are major gateways into the U.S. from other countries and also offer relatively mild climate. The top five countries of origin for foreign buyers were Canada, with 17.6 percent of buyers; the United Kingdom, 10.5 percent; Mexico, 9.8 percent; India, 8.5 percent; and China, 5.4 percent.

While international buyers have looked to American real estate as good investment opportunities and places for vacation homes, the 2009 National Association of REALTORS® Profile of International Home Buying Activity indicates overall interest in U.S. real estate by international buyers declined last year due to the worldwide recession and severe credit crunch.

During the 12-month period between the end of May 2008 and the end of May 2009, an estimated 154,000 homes were sold to foreign nationals, down from approximately 170,000 international transactions during the previous 12 months. The median price for a home paid by foreign buyers for the year ending in May 2009 was $247,100, higher than the overall national price of $198,100 in 2008. A significant number, 45.8 percent of foreign buyers, paid cash for their property, in part because obtaining a mortgage was more difficult than in prior years.

Yun said recent improvements in the credit market will help reverse the slide in foreign buyers. "Stock market gains and improving bank balance sheets will permit a greater amount of lending for second home purchases," he said. "In addition, expanding foreign economies for international buyers and favorable exchange rates give them more purchasing power, particularly in a period of record high affordability conditions in the United States."

U.S. laws do not restrict or scrutinize most property purchases by foreign nationals. There are few barriers to owning property here, unlike transactions in many other countries, although immigration laws prohibit foreigners from remaining in the U.S. continuously for more than six months without a special visa. In addition, international investors are afforded the same property rights as those enjoyed by U.S. citizens.

The prime purpose for purchasing a property in the U.S. is to use it for a vacation home, cited by 33.9 percent of respondents; for both investment and vacations, 23.5 percent; as a residential rental property for investment, 18.3 percent; and commercial property for investment, 3.5 percent.

The 2009 NAR Profile of International Home Buying Activity is based on responses from 3,785 REALTORS® and describes international home buying activity in the U.S. over the 12-month period from the end of May 2008 to May 2009.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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