Buying real estate in the San Francisco Bay Area is always a local experience. The San Francisco Bay area is rife with real estate micro-markets. In our region of the East Bay, we have local real estate markets where the drop in home values can vary by 30% or more – and these communities are only 30 miles apart. This is one reason why international buyers need local professional real estate agents to assist them with their purchase of U.S. eal estate.
Even when the buyer is from out of the area or out of the country, real estate is always a local affair. Many buyers and investors from China, Korea, The Netherlands, Germany, Russia, Ukraine, Canada and many other countries are in the process of buying or investing in U.S. real estate.
The National Association of Realtors reports that in the Spring of 2007 7.3% of homes sold in Florida were to foreign nationals. 65% of Florida real estate agents reported at least one transaction with a foreign buyer.
Nationally, almost one third of Realtors are reporting sales to international clients. 25% of responding Realtors report that their international business is increasing.
A rough profile of the typical international home buyer:
- the typical international buyer purchased a single-family home or townhouse
- the buyer’s primary purpose in purchasing the home was as a vacation venue for family and friends
- the median sales price paid by the typical foreign buyer was $299,500 and was financed through a mortgage loan
- the typical foreign buyer in the U.S. spends 4.2 months in their U.S. property
Sixty-nine percent of international home buyers used mortgage financing, while 28 percent purchased their home with cash. One positive consequence for U.S. housing markets – especially those that boast a significant share of foreign home buyers – is that such purchases lower the risk of mortgage defaults. As a result, cash purchases lessen the foreclosure risk against this group of buyers. Lower foreclosure risk, in turns, lessens the possibility of a price decline in a market. In the wake of the subprime mortgage fallout in the spring of 2007 and the subsequent increase in mortgage delinquencies and foreclosures, the healthy share of cash purchases by foreign buyers is a good sign for the future of those markets.
The reasons international buyers purchase U.S. real estate.
California is the #2 destination for international homebuers with 16% off all foreign real estate purchases. Asian buyers accounted for 44% of all international buyers purchasing California real estate.
The NAR’s conclusion from the survey:
We live in a global economy where there are virtually no trade borders. The Internet is accessible from nearly all countries around the world. Web sites display information about U.S. real estate to any potential home buyers regardless of where they live. And as more and more people in different nations recognize the value of owning property, the opportunities and challenges for real estate professionals to broker U.S. property to foreign home buyers are numerous.
While U.S. housing markets are no longer performing at record-breaking levels, U.S. real estate is still considered a prime investment opportunity for foreign buyers and a “safe haven” in which to put their money. Whether they use their U.S. home as rental/investment property, as a vacation home or both, non-U.S. residents account for a significant share of home buying activity. It is likely they will continue to do so. With the weakened U.S. dollar against foreign currencies, those currencies buy a lot more than in previous years. For example, the British Pound Sterling was worth $1.44 in 2001; by 2004 it was worth $1.83. As of mid-year 2007, the pound was worth nearly $2.00. The euro has also increased in value against the U.S. dollar. More purchasing power for foreign buyers mean they can afford “more house” – particularly in a stabilizing U.S. housing market.
Another factor drives international participation in U.S. residential real estate markets. The U.S. market contains a large supply of real estate. It is also fairly easy to purchase a home in this country; the U.S. does not restrict or scrutinize most property purchases by foreigners, as happens in other countries. There are few barriers to owning a property. Except to the extent necessary to enforce U.S. laws and regulations (including immigration and homeland security), foreign participation in the U.S. housing market is largely free. Foreign investors have the same property rights in the U.S. as Americans do.
Foreign nationals purchasing real estate in the U.S. benefit from engaging the services of professional Realtors with international experience like our own Paul Mees. Paul is a native of The Netherlands. He has an international business background and owns homes in the U.S., Holland and Italy. You can contact Paul at (925) 963–4246
Related Article:
Dollar, real estate slump make American property appealing to foreigners
San Francisco Bay Area Foreclosure Statistics
Banks and local real estate agents are reporting multiple offers on bank owned properties throughout the Bay Area. 
Rent a Room to Help with the Mortgage Payment 
If you read that post you will see how I wanted to move a post on our real estate site - 
Real estate investors and home buyers who aren’t buying San Francisco Bay Area real estate right now, are going to miss the boat. Home owners in the East Bay have seen the worst, but don’t expect price values to start climbing until Spring of 2009.
