Existing home sales: Foreigners are buying. What's their impact?
Although existing home sales dipped last month, foreign buyers are snapping up US homes. In some markets, they may be putting an end to the downturn in existing home sales.
This March file photo shows a sign for new homes for sale in Doral, Fla. In the year ended in June 2011, foreign buyers accounted for a quarter of existing home sales in Florida, according to a survey by the National Association of Realtors and its Florida affiliate.
Alan Diaz/AP
The Woodlands in greater Houston is a planned community that draws middle- and upper-income families looking for good schools, safe neighborhoods, and a suburban lifestyle. So who's moving in?
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Wealthy Mexican entrepreneurs escaping the violence in Mexico, says Bill Gottfried, broker and owner of a Houston real estate firm and a member of the international advisory group of the Houston Association of Realtors. In his informal polling of other brokers catering to international clients, he estimates that roughly a third of home sales in the Woodlands have been to Mexican nationals in the past year.
If the battered housing market hasn't inspired Americans to rush into real estate – existing home sales fell nearly 1 percent from January to February, the National Association of Realtors (NAR) reports – it is attracting foreigners. They're snapping up homes in increasing numbers for various reasons: Home prices have fallen, the value of the US dollar has weakened against some currencies, and the US market is seen as safe and stable. That investment is helping to stabilize US home prices, at least in metropolitan areas popular with foreigners.
Foreign sales of residential property grew nearly a third in the year ending March 2011, according to the latest figures from the NAR. At $82 billion – only about 8 percent of existing home sales – foreign purchases aren't doing too much to boost home prices in, say, Iowa. But in the states where foreign sales are concentrated, the influx of international buyers appears to be buoying the real estate market. Several of those states are the ones hit hardest by the bursting of the housing bubble.
Take Florida. All by itself, the foreclosure-battered state attracted 31 percent of all foreigners' purchases, according to the NAR. In a separate survey in conjunction with its Florida branch, the NAR estimated that foreigners accounted for a quarter of all the state's residential sales in the 12 months ending in June 2011. That level of sales can have a big impact.
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