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.
