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:
- Lakeland-Winter Haven, Fla.
- Cape Coral-Fort Myers, Fla.
- Orlando-Kissimmee-Sanford, Fla.
- North Point-Bradenton-Sarasota, Fla.
- Miami-Fort Lauderdale-Pompano Beach, Fla.
- Phoenix-Mesa-Glendale, Ariz.
- New York County, N.Y. (Manhattan)
- Honolulu, Hawaii.
- Tampa-St. Petersburg-Clearwater, Fla.
- Las Vegas-Paradise, Nev.
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%|
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.
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.”