While total unit sales from international home buyers decreased from last year, total sales dollar volume increased 13 percent. This is indication of more upscale buyers entering the market, according to REALTORS®.
The National Association of REALTORS® 2015 Profile of Home Buying Activity of International Clients indicates between April 2014 and March 2015, total international sales were estimated at $104 billion, compared to the previous year's estimate of $92.2 billion. This represents 8 percent of the total existing-home sales dollar volume. Approximately 209,000 houses are estimated to have been sold to foreign buyers over the time period, accounting for approximately 4 percent of total existing home sales.
"In 2014, sales transaction to buyers outside of the U.S. dropped 10 percent, possibly due to the strengthening of the U.S. dollar in relation to international currencies and weakening foreign economies," said National Association of REALTORS® chief economist Lawrence Yun. "However, the amount of money spent has increased; this means international purchasers in the U.S. have become an upscale group of buyers, spending more money on fewer homes."
China, Canada, Mexico, India and the United Kingdom accounted for 51 percent of all purchases by international buyers. For the first time buyers from China exceeded all other countries in terms of units purchased and dollar volume, purchasing an estimated $28.6 billion worth of property. Buyers from Canada followed with $11.2 billion in purchases, followed by India, $7.9 billion; Mexico, $4.9 billion; and the U.K., $3.8 billion.
International buyers tend to purchase more expensive properties, averaging $499,600 compared to the overall U.S. average house price of $255,600. Chinese buyers typically purchased the most expensive properties, at an average price of $831,800.
Thirty-five percent of REALTORS® reported working with an international client in the 12 months ending March 2015, up 7 percent from 28 percent in 2013. About 46 percent of reported international transactions were intended for primary residences, 20 percent for residential rentals, and 26 percent for investment rentals, vacation homes or both.
Global buyers also purchased properties for commercial rentals and as residences for children studying in U.S. educational institutions. Indian buyers were the most likely to purchase a primary residence (79 percent), while Canadian buyers were most likely to purchase property as a vacation home (47 percent).
Florida, California, Texas and Arizona accounted for half of all international sales. Florida remains the top destination for international buyers, with 21 percent share of all foreign purchases, followed by California with 16 percent; Texas with 8 percent; and Arizona with 5 percent.
Chinese buyers tended to gravitate towards the West Coast, which provides ample education, business and trade opportunities, while Canadians focused on the Southwest and Florida, seeking winter vacation opportunities.
"Chinese buyers are very keen on purchasing property in Silicon Valley because our educational institutions are among the best in the country. Others are here on an EB-5 visa for business purposes," said Mark Wong, chair of the Silicon Valley Association of REALTORS®' Global Business Council.
Wong, who just returned from his fifth trip to China in about 18 months, encourages REALTORS® to complete the NAR Certified International Property Specialist (CIPS) designation. "The CIPS designation gives Realtors an edge because of the specialized training the courses provide and understanding the challenges international buyers face," said Wong.
The Silicon Valley Association of REALTORS® is offering real estate professionals the opportunity to complete classroom requirements for the CIPS designation on September 30, Oct. 1, 2, 5 and 6. For more information, or to register for the CIPS courses, call SILVAR at (408) 200-0100.
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 email or call the SILVAR office at (408) 200-0100.