Alan Diaz/AP
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.

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.

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?

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.

Foreign sales in Florida may be doing more than buoying the market. "Iit may be enough to turn it around, depending on the selling pressures," writes Susan Wachter, professor of real estate and finance at the University of Pennsylvania's Wharton School  in Philadelphia, in an e-mail. "It is not just that a quarter [of buyers] are foreigners, it is that foreigners are likely to be the marginal buyers – those that are offering top dollar. Their wealth has not been hit by the crisis, unlike the balance sheet of the US buyer."

Two other states hit hardest by the housing bust are among the four most popular states for international buyers, according to the NAR: California (12 percent of international sales in the US) and Arizona (6 percent).

The US is also the most popular locale for international buyers of commercial real estate. Perennially the No. 1 destination of investment money, the US received fewer first-place votes in 2011 than in 2010, as other locales, such as Brazil, grew in popularity, according to a survey released in January by the Association of Foreign Investors in Real Estate, based in Washington. Still, 60 percent of the commercial investors in the survey said they planned to increase their property purchases in the US this year.

In Texas, commercial and residential real estate investors are increasing their activity. Texas accounted for 9 percent of foreigners' residential sales in the US, according to the NAR.

"We are seeing a larger component of international buyers coming into the Houston metro area," says Mr. Gottfried, the local broker and owner of Gottfried International Estates.   

With its diversified economy of oil, electronics, and health-care, Houston has long attracted buyers from Mexico and other Latin American destinations. Their purchases have increased in the past two to three years, Gottfried says, and half or more of them purchase properties to live in while they work in the Houston area.

Now, however, he's seeing increasing inquiries and buyers from Canada, the United Kingdom, Germany, France, China, and Australia.

"We have very good pricing for our properties," Gottfried says. "We are seeing our numbers moving up."

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Existing home sales: Foreigners are buying. What's their impact?
Read this article in
https://www.csmonitor.com/Business/new-economy/2012/0321/Existing-home-sales-Foreigners-are-buying.-What-s-their-impact
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe