A rising number of foreign investors in U.S. stocks are now buying homes after finding out how low home prices have fallen and how they can earn more from buying homes than from tracking stocks.
Foreigners are also attracted by the large number of affordable property managers ready to rent out units and collect rent on their behalf. Foreign buyers can rent out units immediately and start receiving monthly rental income. They’re also encouraged by the fact that the U.S. is open to foreign buyers of U.S. homes, laying out almost no restrictions on foreign ownership of U.S. real estate.
With their cash, more and more foreign buyers are getting helped by realtors in snapping up among the cheapest properties in the U.S., both in the distressed market and in the newly-built sector.
Recently, the sales offices of the luxurious Viceroy condo hotel development in downtown Miami announced they’ve sold 262 units out of the 372 units available in the complex and that nearly 90 percent of all units sold were acquired by foreign buyers who paid cash. According to Viceroy marketers, foreign buyers were attracted by the prices, which have fallen by more than half from 2007 price levels.
The city of Miami has been a favorite of foreigners over the past years, particularly buyers from South America, Canada, Great Britain and other European countries. The plunge in Miami home prices has piqued their interest even more. Recently, a group of U.S. realtors traveled to Hong Kong to respond to inquiries about buying homes in the U.S.
Another Florida city posting increases in home sales to foreigners, particularly British buyers, is Orlando. With the city’s average home price dropping below $100,000 or roughly 64,000 British pounds, buyers are getting images of great profits when the U.S. real estate sector finally recovers. The current average price is a sharp plunge from the average home price of 169,000 British pounds in 2007. Based on data from the Orlando Regional Realtor Association, average house prices fell by 8 percent in August from the previous month and fell by 22 percent from August 2009.
With a rising inventory of lower-priced homes in Florida, a British real estate firm is now earning from finding Florida homes for Brits. It says it doesn’t need to offer distressed homes, which are typically the cheapest ones, as there are now a lot of newly-built homes and existing homes which are also offered at deeply discounted prices.
Three other states, namely California, Texas and Arizona, are also attracting foreign buyers. Over the past three years, these states together with Florida accounted for 53 percent of all home sales to foreign buyers, with 16 percent of buyers acquiring homes priced above $500,000 and with 55 percent of them paying in cash.
Although home sales to foreigners accounted for only about seven percent of U.S. total home sales, these sales have been helping stabilize the housing markets of Miami and other cities.