Real-estate values in the U.S. that are a third off their peaks along with a weaker dollar are prompting Asians, Europeans, Latin Americans, and other foreigners to go on a property buying spree in America.
International buyers accounted for $82.5 billion, or 8.9 percent, of the total $928 billion spent on residential real estate in the 12 months ended in March, according to a survey released Monday by the National Association of Realtors. It was up 24 percent from $66.4 billion in the previous year period, the survey said. The survey found that 62 percent of international buyers paid in cash, The Wall Street Journal reported.
"There's this international view that America is on sale," said Eric Workman, vice president of sales and marketing for Mack Companies, a Chicago-based company that buys foreclosed homes and manages them as rentals for other investors, the Journal said. Around 20 percent of the 102 properties he has sold this year have gone to foreign buyers, he said.
The flood of foreign capital into the real estate market reflects several forces, economists say. Chinese, Brazilians, and Canadians worry their own housing prices are overpriced, while buyers from Venezuela, Russia, and Mexico are looking for a safe haven for their cash amid risks of political uncertainty in their own countries, the Journal said.
International purchases were equally split between non-foreign residents and those who have recently immigrated or are temporary visa holders, according to the Realtors’ survey.
The cheaper dollar is driving many of the purchases, the Journal said. Yves Gougoux, a 61-year-old advertising executive who lives in Montreal, planned to close Tuesday on a $1.5 million oceanfront home in Vero Beach, Fla. "I look around and see more and more French Canadians down here," the Journal quoted Gougoux as saying.
With the U.S. dollar and the Canadian dollar near parity, the price of the house comes to around 1.46 million Canadian dollars. Ten years ago, when one U.S. dollar bought 1.53 Canadian dollars, a $1.5 million home in the U.S. would have cost 2.29 million Canadian dollars, the Journal said.
Signs that U.S. housing may have bottomed are also driving some purchases, particularly in markets like New York City. Wei Min Tan, a Manhattan real estate agent with Rutenberg Realty, says demand from foreigners has surged in the past two months, the Journal said. "People realize Manhattan prices are not going lower," said Tan.
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