Foreign Buyers Rushing Into U.S. Market
International buyers are continuing to make a beeline for the American housing market. Attracted by cheaper home prices, relative economic stability and an affinity to all things American, these buyers are lapping up homes. Their interest continues to rise along with rising home values and an improving market, says USA Today.
Between 2009 and 2013, foreign interest in U.S. homes soared. According to RealtyTrac, interest in buying American homes jumped 95 percent or more in 10 countries, and at least doubled in nine of the 10 countries. Among UAE residents, the desire to own a home in the U.S. skyrocketed 352 percent. That’s the highest of any country.
For foreign buyers, now seems to be the best time to jump into the market, experts say.
“The U.S. real estate market is coming off of a rough patch and entering recovery mode,” said Daren Blomquist, vice president of RealtyTrac, in an interview with 24/7 Wall St. “And so international buyers see it as a great time to jump in and catch the U.S. market on the upswing.”
One of the key factors driving interest in U.S. homes is the common language. According to the media, English-speaking countries accounted for 68 percent of international residents looking for American homes. Canada alone accounted for 45 percent of all international interest. Australia and United Kingdom accounted for more than 10 percent of all interest.
Language isn’t the only factor. Foreign buyers like the idea of owning an American home also because of the country’s reputation as a relatively safe place for investment. There’s both political and relative economic stability here. Blomquist said that for many buyers the U.S. represents “the most stable country out there.”
The top 10 countries racing to buy American homes according to 24/7 Wall St. are Germany, Sweden, Canada, Australia, United Kingdom, Italy, France, Hong Kong and China, Switzerland and the United Arab Emirates.
Home Construction Pace Slows Down
The pace of homebuilding in the U.S. in March fell short of the forecast indicating that recovery in residential construction will be slow.
Housing starts increased 2.8 percent to a 946,000 annualized rate, according to Commerce Department data. The median estimate of 78 economists surveyed by Bloomberg called for an increase to 970,000. Permits for future projects also declined.
The advent of the spring selling season has helped jumpstart activity in the market in the Northeast and Midwestern parts of the country, but the recovery rate has been slowed down by rising interest rates, slow wage growth and tight credit. Homebuying still remains a dream for many potential buyers. Strict lending guidelines requiring a sizeable down payment and squeaky clean credit records continue to hinder the market. Bigger gains in employment are necessary to overcome declining affordability, according to Bloomberg.
“Housing will contribute positively to GDP this year, but not by nearly as much as in 2012 and 2013,” Dana Saporta director of U.S. economics research at Credit Suisse in New York told Bloomberg. “We are seeing continued improvement in housing starts, but at a slower pace.”
Building permits also declined 2.4 percent to a 990,000 annualized pace. The good news is construction of single-family homes jumped 6 percent to a 635,000 rate in March compared to 599,000 in February.
U.S. Market Lures Foreign Buyers; Home Construction Slows
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