In a slow housing market, one type of buyer is still bullish on America -- foreigners.
According to a new study by the National Association of Realtors, about one in five American real estate agents sold a second home in the year ending April 2007 to a foreign buyer, defined as someone who has legally entered the United States to buy a home. A quarter of the agents surveyed said their business with overseas buyers had increased over the past five years.
Interest is up primarily because the weak dollar gives foreigners more buying power, but also because American home prices are low compared to places like Britain and Japan. "A lot of them perceive the United States as a bargain," says Ruth Krinke, a Steamboat Springs, Colo., real estate agent.
Buyers are coming from all over the world, the study says, but the biggest proportion -- about a third -- is from Europe, while a quarter come from Asia and 16% from Latin America. By country, the largest proportion of buyers comes from Mexico (13%), the United Kingdom (12%) and Canada (11%).
The study showed that 47% of foreign buyers were looking for a place to vacation, while 22% wanted an investment. Nearly a third cited both motives for their purchase. Though most purchased single-family homes or townhouses, 22% bought condominiums, compared to only 12% of American buyers.
Foreign buyers are well aware of the current anemic U.S. housing market. But prices in once-sizzling areas overseas, particularly in Europe, haven't been putting in stellar performances, either. An online research firm, overall home prices in Greece, Ireland, Spain, France and Israel all experienced declines of more than 7% in the first quarter of this year from the year before, compared to 4% in the U.S. for the same time period. Year-over-year prices in Europe's strongest housing market, Riga, Latvia, fell 3.5% in June from a year earlier. According to NAR, U.S. year-over-year existing home prices were flat for June, while new home prices fell 2.2%.
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