Friday, September 28, 2012

Canadians, Chinese buying into the American Dream

Alan Diaz / AP file

Among all foreign browsers of Realtor.com, Canadians rank No. 1, routinely checking out Miami, Fort Lauderdale and Orlando, according to data provided by the website.

By Bill Briggs, NBC News contributor

With many U.S. consumers still lukewarm about buying into the American dream, Canadians, Chinese and Mexicans are burning up Realtors? cell phones and emails, grabbing up swank vacation nooks, secure places to stash their cash, or just old-fashioned bargains.

Foreign purchases of U.S. homes have climbed by 24 percent since 2011, reports the National Association of Realtors, reaching $82.5 billion in total annual sales,?and helping brace once-creeky markets like Miami.

?They love the U.S. because their money is safe here. Even if they only break even on a property, they know they can get their money out,? said Matey Veissi, broker-owner with Veissi & Associates in Miami. She estimates that 35 to 40 percent of her firm?s business is conducted with foreign buyers. ?South Beach and Miami Beach are popular with the Brazilians ? they like the water. The west coast of Florida is popular with the Europeans because it?s quieter. The Canadians like the middle of the state.?

But even as residential prices perk up in many U.S. cities, international interest in American homes is expected to hold firm ? simply because with many international buyers, it?s not all about the dollar signs, said Jed Smith, an NAR economist.

As with some American homebuyers, it?s also about status.

?Foreigners purchase for a variety of reasons: trophy homes, desire to put money in the U.S. for safety, desire to have a place to visit for vacation, desire for a rental unit,? Smith said, adding that about half of those buyers move to the United States. ?These factors ? tend to dampen the effects of changes in total overall cost."

Case in point: Miami, where home values bumped 2.1 percent higher from June to July, according to the S&P Case-Shiller index released Tuesday.??That?s very much an international city that tends to attract people from a variety of places who also have quite a bit of money and who are looking to make a statement,? Smith said.

Through March 2011 to March this year, Canadians led the international housing invasion, comprising 24 percent?of foreign sales, or about $16 billion in collective purchases, Smith said.

For Canadians, proximity is the prime enticement to buy American and many seem drawn to the balmy breezes of Florida, said Steve Berkowitz, CEO of Realtor.com, operator Move, Inc.

?A second home in the U.S. provides a relatively inexpensive way for Canadians to escape snowy weather and below-freezing temperatures,? Berkowitz said.

Among all foreign browsers of Realtor.com, Canadians rank No. 1, routinely checking out Miami, Fort Lauderdale and Orlando, according to data provided by the website.

?One of the things about international purchases: Once that community gets established in that area, it tends to attract like people from that community,? said NAR?s Smith. ?So the Canadians have been coming to those areas for quite a while.?

Chinese consumers also are frequent visitors to Realtor.com, virtually exploring neighborhoods in Los Angeles and San Francisco, the site reports. Chinese comprised 11 percent of all international transactions from March 2011 to this past March ? forming the second-largest group of foreign buyers and spending about $9 billion during that span on American housing, according to NAR.

Income levels largely drive the consumer tastes of Chinese house hunters, experts say.

?On the West Coast, you might have five or 10 families from China who pool their resources to purchase something, have a student live in it and then rent out the rooms. At the end of the student?s time, hopefully they sell the place for a capital gain. Those are the middle-class Chinese, buying for an investment,? Smith said. ?There are also a fair number of wealthy people in China who are buying for a major second home.?

In San Francisco, upscale high-rises that have attracted venture capitalists and members of the San Francisco 49ers now are drawing affluent Chinese residents, said Realtor Matt Fuller. Such plush condo buildings include Millennium Tower ? which boasts three sets of concierges and a salt-water pool ? and One Rincon Hill where, he said, prices can touch seven figures. Those exclusive, residential spires are relatively new to the Bay Area, he added.

?It?s hard to say if the number of Chinese buyers is increasing because we have more interest (from China) or if we?re noticing this trend because this is a style of construction and a level of service that we didn?t used to have here,? Fuller said.

Those elite addresses are fancied by British buyers as well, Fuller said.?Online shoppers from the United Kingdom comprise one of the thickest clumps of foreign lookie-loos at Realtor.com. They?ve also been checking out Los Angeles, Orlando and Las Vegas, according to the site?s stats.

McMansions favoured
And when they do peruse American real estate online, the Brits ? like many other Europeans ? tend to click on larger ?McMansions,? said Jed Kolko, chief economist at Trulia. After reviewing user trends at that real estate website, Kolko noticed that Dutch consumers check out the biggest American abodes, with a median size of 2,400 square feet, followed closely by U.K. consumers, whose targeted homes have a median size of 2,342 square feet.

Americans who use Trulia examine properties with?a median size of 1,854 square feet.

?The rest of the world might make fun of Americans for our big portions, big homes and big butts, but it turns out that most foreigners look at bigger homes than what most Americans look at ? among all searches of U.S. homes on Trulia,? Kolko wrote in a blog last week.

By comparison, Mexican consumers who tap Trulia?s listings are focused on even smaller homes ? those with a median size of 1,794 square feet, Kolko reported.?

But Mexicans currently spend about $6.5 billion a year on U.S. homes, NAR says, ranking Mexico at No. 3 among the nations that lately have been gobbling up American properties.

?They are focused heavily on proximity, namely Texas,? Smith said. ?They?re buying mainly for safety as well as for a better environment. ?There?s been quite an influx of Mexican money into this country in recent years just based on the safety issues in that country.?

On Realtor.com, Mexicans have been inspecting homes in San Antonio and Laredo, Texas, the site reports.

And in Miami, one Mexican client taught Realtor Veissi just how careful people in that country have become about protecting their monetary secrets. Although Veissi was representing that Mexican family in its house search, her description of the artful process sounds like it involved all the cunning of a big-stakes poker game.

?They started with a price point of $250,000 and asked me about the price of eggs and milk here,? Veissi said. ?They led me to believe they were on a budget. Then they gradually increased the price (for their hunt), which I found interesting, and ended up with a home at close to $1 million.

?They don?t want to tell you a lot about their finances unless they know you better. Initially, they didn?t trust me. Most Americans don?t have any patience with that,? she added. ?But when you develop the relationship, you get the entire family, their friends, everyone they?re connected with (as future clients). It just takes a long time to develop that trust.??

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With interest rates at all-time lows, is now the time to rush out to buy a house? Barry Habib, Residential Finance Corporation, offers perspective.

Source: http://bottomline.nbcnews.com/_news/2012/09/27/14104991-foreign-residential-invasion-why-the-new-neighbors-may-not-speak-your-language?lite

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