The Real Deal Miami

SF benefits as international home buys in U.S. soar to $82.5 billion

June 11, 2012 02:15PM

International investors encouraged by record affordability and fear of a European collapse purchased $82.5 billion of residential real estate in the U.S. from March 2011 to March 2012, according to a National Association of Realtors survey cited by the Wall Street Journal. This comes as a 24 percent, or $18.5 billion, increase from the year period ending in March 2011. Approximately 55 percent of the foreign investment came from just five countries: Canada, China, Mexico, India and the United Kingdom, with Canadians representing the largest share of U.S. investment, nearly 25 percent. Similarly, five states accounted for 55 percent of the international sales: Florida, California, Texas, Arizona and New York.

The influx of foreign buys is having a particularly important impact on Florida’s housing market as South Americans, Canadians and Europeans bring money and interest back to luxury developments crippled by the housing bubble. Now the condo inventory in hot spots like Miami has fallen from a supply of close to 25,000 three years ago to just a few thousand. “They’re buying them [luxury condos] two and three at a time and paying cash,” said Realogy CEO Richard Smith.

Almost half of these investors identify themselves as temporary visa holders or recent immigrants to the U.S., although the other half say that they are permanent residents of foreign nations that spend less than six months each year in America.

The perception of stability U.S. real estate holds among foreign buyers appears to be behind the surge. Some 50 percent of those surveyed said that they viewed U.S. real estate as secure and profitable, while around 40 percent claimed that the desirability of location was the most important factor when they buy. International investors “are either looking for safe havens or bargains, so we’re seeing it at both ends of the spectrum,” said Kenneth Rosen, University of California, Berkeley’s Fisher Center for Real Estate Research chairman. [WSJ]