By Andrea V. Brambila, Inman News

The state of the U.S. real  estate market is in the eye of the beholder. While many Americans have shied  away from home purchases due to the economic downturn, a growing number of  cash-rich foreign investors are seizing the opportunity to snap up U.S. homes at  bargain prices.

Not all U.S. markets are universally  appealing to out-of-country investors, however. International homebuying  activity is largely concentrated in a few areas of the country. Using public  record data compiled by San Diego-based real estate data analysis firm DataQuick, Inman News has identified the 10 most popular areas in the  U.S.  for foreign homebuyers.

The majority of the markets, if not  all, are recognizable as tourist destinations. Six of the 10 areas are in Florida; three are in the West (Arizona,  Hawaii and Nevada);  and one is in the Northeast (New York).  No Midwest markets made the list.

The 10 markets, ranked by highest  share of foreign buyers, according to public records data, are:

  1. Lakeland-Winter Haven,   Fla.
  2. Cape Coral-Fort Myers, Fla.
  3. Orlando-Kissimmee-Sanford, Fla.
  4. North Point-Bradenton-Sarasota, Fla.
  5. Miami-Fort Lauderdale-Pompano Beach, Fla.
  6. Phoenix-Mesa-Glendale, Ariz.
  7. New York County, N.Y. (Manhattan)
  8. Honolulu, Hawaii.
  9. Tampa-St. Petersburg-Clearwater, Fla.
  10. Las  Vegas-Paradise, Nev.

 

waterfront home in St Petersburg-Annalisa Weller

waterfront home in St Petersburg-Annalisa Weller

 

9 Tampa-St. Petersburg-Clearwater, Fla.

Total population (2010): 2,783,243
% of all homes sold that were purchased by buyers with a foreign mailing address in the public record (May ’11 – Jan. ’12) 2.9%
Median sales price for existing, single-family homes (Q4 ’11): $135,500
Median sales price % change (Q4 ’10-Q4 ’11): 3%
Median sales price for condominiums/co-ops (Q4 ’11): $63,700
Median sales price % change (Q4 ’10-Q4 ’11): -23.8%
Top 3 countries of origin for foreign buyers: Canada, United Kingdom, Israel
% of people who moved in the past year who were foreign-born and moved from abroad (2010) 2.1%
Walk Score: 48

The Tampa  metro area accounted for 11 percent of international sales in Florida in the 12 months through June 2011,  according to a National Association of Realtors report. Only the Miami and Orlando metro areas, also on this list,  surpassed the Tampa  area’s share of the state’s international sales.

A public records analysis by  DataQuick revealed that, of all homes sold in the Tampa metro area between May 2011 and January  2012, 2.9 percent were purchased by buyers with a foreign mailing address.

Of the four counties that make up  the Tampa area, Pinellas  County had the highest concentration  of buyers listing a non-U.S. home address, at 4.6 percent, followed by Hillsborough County at 2.2 percent.

view from waterfront home in St Petersburg-Annalisa Weller

Almost three-quarters (72.3 percent)  of the area’s foreign buyers were Canadian. Israel  and the U.K.  each accounted for about 4 percent of the area’s foreign buyers.

Carl Stratton, broker and general  manager at Dennis Realty and Investment Corp in Lutz, Fla.,  said the overseas buyers who work with his firm hail from Canada, Israel  and South America.

“Canada  and Israel have not had  their housing markets fall like they have in America, so the timing is not as  good to buy in their countries. South Americans see owning property in Florida (as) a status  (symbol) in addition to it being a good investment,” he said.

“Also, regardless of America’s current housing crisis, our housing  market has always bounced back, and foreign investors are banking on Tampa’s real estate leading  the country in a housing market rebound.”

His international buyers are  typically buying and renting out investment homes with three to four bedrooms,  two bathrooms and a garage.

“(It’s) good timing to buy now in the U.S.  Tampa Bay  home prices are producing a better return on investment for the rental-home  buyers compared to the same type of homes bought in different cities around the  country,” Stratton  said.

The median sales price for existing  single-family homes in the fourth quarter was $135,500, up 3 percent from the  year before. Condos sold for a median $63,700, down nearly 24 percent on a  year-over-year basis. The condo median sales price was the third-lowest among  the 10 markets featured in this report.

“I think Tampa/Clearwater  is a desirable and well-known large metropolitan area and has surprisingly  low-priced real estate in comparison to South Florida.  Right now the foreign buyers are buying with cash,” Stratton said.

He added that foreign buyers are open to buying  foreclosures or short sales as long as the properties meet their requirements.

Nearly 17 percent of overall sales  in the Tampa metro area were foreclosure sales  in the last three months of 2011 — the lowest share among the Florida markets on this  list and below the national rate. Nevertheless, the Tampa area had an above-average foreclosure activity rate in fourth-quarter 2011, with 1 in 149 units receiving a foreclosure filing.

“North Tampa and  Central Pasco County  (have) many newer homes available for sale. These are particularly attractive  to investors,” Stratton said. “Since there is … an abundance of  these properties currently being foreclosed on and ‘short sold,’ there is a  unique opportunity for foreign and domestic investors alike to invest in these  properties.”

Money transfers and tax regulations  can be challenging when working with foreign investors, said Stratton.

“Depending on the country, it can be difficult having the money  transferred over for the closing, so special considerations  need to be made prior to closing,” he said.

“Foreign investors need to  consider all the rules of our (Internal Revenue Service) as well as the  investors’ home-country tax regulations where the funds are originating. If the  investor doesn’t follow the rules correctly, he could have penalties from one  or both countries that will negatively affect his return on his investment.  Most foreign investors will form  a corporation and (buy) the properties in the corporation.”

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