Boynton Beach Homes For Foreign Buyers

Boynton Beach, Florida - We have information on Boynton Beach Home selling, home buying, mortgages and Florida Home Insurance. If you are preparing to buy or sell a home or condo in Boynton Beach you may have questions. We offer some of the trends in the Florida Real Estate market. We will be happy to provide any information you need to buy or sell real estate in Boynton Beach, and the surrounding Palm Beach County area.

Characteristics of First-Time Home Buyers

Foreign buyers were slightly more likely to purchase an existing home than was the case for all U.S. home buyers. REALTORS reported that 11 percent of foreign buyers purchasing a home in Florida bought a new home, while the remaining 89 purchased existing home, percentages which are the same as reported in last year’s survey. In comparison, NAR’s Profile of International Home Buying Activity, 2011 reported that nationally new home purchases were 15 percent of the total homes sold.

Thirty-nine percent (39%) of foreign buyers purchased a detached single-family home, compared to 51 percent last year. In contrast, single-family homes accounted for 88 percent of all homes sold at the national level in 2010. Forty-nine percent of international buyers purchased condos (up from 37 percent last year), compared to12 percent of condo buyers at the national level.

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The location choices of foreign buyers differed markedly from the patterns reported among all home buyers nationally. Compared to all home sales, as reported in NAR’s 2010 Profile of Home Buyers and Sellers, foreign buyers were much more likely to purchase in a resort area (32 percent of foreign purchases vs. one percent of all homes sold nationwide) on in a central city/urban area (36 percent of purchases vs. 18 percent). The significant share of resort buyers is not surprising given the nature of the Florida market. In addition, international buyers found Florida’s central cities to be desirable locations in a number of instances.

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Florida purchasers viewed Florida real estate prices generally as less expensive than real estate prices in their home country. International buyers tended to purchase homes at prices above the national median price of $172,900 reported for 2010. In 2010/11 the median price for Florida purchases by international buyers was approximately $174,700, compared to $180,000 in 2009. In contrast, the overall median prices in Florida for single family and condo properties were respectively $136,500 and $91,300 in 2010.

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According to NAR’s 2010 Profile of Home Buyers and Sellers 91 percent of all home buyers used mortgage financing to purchase their homes. Among recent foreign buyers in Florida, however, the use of mortgage financing was much less frequent. Overall, 13 percent of foreign buyers were reporting as financing their purchase with a mortgage, while 86 percent paid cash with no mortgage financing. This disparity appears to be due to the differences in credit rating practices between the U.S. and foreign countries and the difficulties in confirming credit worthiness internationally.

Foreign buyers typically don’t have credit ratings that are computed on scales similar to U.S. practices, don’t have Social Security numbers, and have credit and asset profiles significantly different from U.S. expected characteristics. This makes obtaining a mortgage difficult for the foreign buyer.

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Forty-one percent (41%) of foreign buyers in Florida purchased a property to use as a vacation home. Approximately 23 percent purchased a home to be used as a rental property. Given the U.S. visa and residence limitations on the length of time that foreign buyers may be able to use personally their property, 25 percent of sales were for a dual use—as a vacation home for the buyer’s family and/or friends, and as a rental property at other times. Six percent (6%) of properties were reported purchased as a retirement home.

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2011 National Association of REALTORS Profile of International Home Buying in Florida

To assess the significance of foreign home buyers in Florida, the National Association of REALTORS, in cooperation with the Florida REALTORS association conducted a survey of Florida REALTORS, asking the membership about their experiences in working with international clients. The survey was similar to last year’s survey as reported in Profile of International Home Buyers in Florida, 2010.

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This year’s survey was conducted during the late June/early July time frame, requesting information on REALTOR experience with international buyers over the previous 12 months. Accordingly, the conclusions for this year’s survey are applicable to the 12 months ending June 2011. A total of 1024 responses were received, of which 787 (77 percent of respondents) reported having served foreign clients.

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The international real estate market, defined as non-resident foreigners purchasing residential real estate in this country, is important to Florida. NAR’s Profile of International Home Buying Activity, 2011 identified the total U.S. market of existing home sales to non-resident foreigners at $41 Billion, with an additional $41 Billion of sales each year to recent immigrants and resident foreigners. Total residential sales in Florida for 2010 were estimated at approximately $48.8 Billion, and sales to foreigners were estimated at $12.7 billion. Approximately 25 percent of total Florida residential sales are estimated to have been to foreigners in the 12 months ending June 2011; the estimate is subject to plus or minus 5 percent error.

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This report provides insights into the international segment of Florida’s residential real estate market. Nationally, the level of international sales is relatively small—in the neighborhood of 3 percent of all transactions; however, for Florida international sales are a major portion of the market:
• Approximately 25 percent of all sales in Florida are to foreigners.
• Nearly all sales are all-cash.
• Foreign purchasers buy upper end homes – median approximately $174,700.
• Foreign purchasers bought because of good values in U.S. housing market, helped by the weaker dollar.
• Canadians lead, with the UK now less important. Brazil and Venezuela have become more important.

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In recent years as a result of the Great Recession, financial crises, foreclosures, and troubled consumer finances the U.S. housing market has suffered both volume and price declines. The total U.S. Existing Home Sales (EHS) market achieved robust sales growth starting in 2001, ultimately attaining a reported level of 7.1 million existing homes sales on an annual basis in 2005. However, for the past 3 years existing home sales have been reported as hovering in the range of 4.8 to 5.2 million sales per year.

• Total U.S. existing home sales declined nationally by 31 percent from the peak in 2005 to 2010. The corresponding price decline over that time period was 21 percent. Regional and month-to-month experiences were significantly worse in a number of cases.
• Single family sales in Florida fell from 248,600 in 2005 to 170,800 in 2010, a decline of 31 percent. According to reports from Florida REALTORS, prices declined from to $235,100 to $136,500, a decline of 42 percent.

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The demand for U.S. homes by foreigners is different from the overall U.S. market. All real estate is local, and the important domestic market drivers-- jobs, consumer confidence, family formation, and economic growth—have had major negative impacts on existing home sales in domestic transactions. International sales of U.S. homes to foreigners, however, have different market drivers—perceptions of value relative to foreign comps, the desire to diversify assets, potential vacation use, rental opportunities, and an interest in placing assets in areas with well-defined and secure property rights.

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NAR’s Profile of International Home Buying Activity, 2011 indicates that the international market has been growing slightly in recent years, which is significant in view of overall market declines in U.S. residential sales of existing homes. There is rising affluence throughout the world, and clients come from a wide variety of countries to purchase U.S. real estate. Four states—Arizona, California, Florida, and Texas accounted for 58 percent of total U.S. residential home sales to non-resident foreigners in the 2009/2010 time frame. Florida accounted for 31 percent of total U.S. residential home sales to non-resident foreigners in the same time period.