Foreign investors could very well be your meal ticket. At least that is what the new report 2016 Profile of International Activity in U.S. Residential Real Estate by the National Association of Real Estate suggests.
As the U.S. dollar is growing stronger—and other countries experience economic downturns—foreigners are jumping at the opportunity to invest in U.S. real estate. While the report focuses on residential purchases, all market segments, including commercial and industrial, are poised to see an uptick in foreign investment.
Here are some key highlights from the report that indicate the trend is one all real estate agents should take seriously:
45 percent of foreign buyers come from five countries
Foreign buyers who purchased residential property came from China ($27.0B), Canada ($8.9B), India ($6.1B), the United Kingdom ($5.5B), and Mexico ($4.8B). The nonresident foreign buyers predominantly came from Canada and the United Kingdom, while resident foreign buyers came from China, India, and Mexico.
To better serve those clients, wise agents will take the time to learn about the cultural nuances of those countries—and the countries of any client with whom they work.
We’re seeing a shift in the type of buyer
From April 2015 to March 2016, fewer nonresident foreigners purchased properties. In fact, resident foreigners made up 59 percent of the buyers, while nonresident foreigners accounted for 41 percent. In the past, that number was split evenly.
Furthermore, among foreign buyers, overall residential property sales fell from $103.9 to $102.6; however, the number of properties purchased rose 3 percent. Resident foreign buyers are buying less expensive properties than nonresident foreigners typically do, so more agents in more localities will be working with foreigners who plan to live in the states.
Sales to foreign buyers are typically higher
In the states, the median price of existing home sales is $233,058, whereas, foreign buyers purchased properties with a median value of $277,380. However, the report concludes that because the distribution of nonresident foreign buyers skews to the upper end, a deeper look at average prices shows that nonresident foreign buyers
purchased properties that cost $491,427 on average compared to resident foreign buyers who purchased properties that cost $467,444.
Five states lead foreign investment sales
While foreign buyers are purchasing property across the nation, 51 percent of the residential property purchases landed in Florida (22 percent), California (15 percent), Texas (10 percent), Arizona (4 percent), and New York (4 percent).
Takeaway: So what does all that data mean for you? With an influx of foreign buyers who are purchasing higher-priced homes, you have an opportunity to serve a niche group—and make a great deal of money. Just be sure that you learn everything you can about working with this unique cohort of buyers, including cultural differences, financing for foreign persons and establishing credit, tax and documentation requirements, and more.
Take the Foreign Investment in U.S. Real Estate to learn everything you need to know to stay ahead of this trend.