WASHINGTON (7/11/14)--It's been widely reported that cash sales in the housing market have increased considerably in recent months, and one factor that may be driving the surge is the influx of foreign investment.
As home prices remain low--despite steady but slow price growth this year--and as wealth in some places in the international community has expanded, many foreign buyers are coming to the United States to purchase real estate as a home or investment.
Between April 2013 and March 2014, total sales to foreign buyers topped $92 billion, a $24 billion increase compared with the prior year, a 35% jump, according to the National Association of Realtors (NAR) 2014 Profile of International Home Buying Activity.
"We live in an international marketplace, so while all real estate is local, that does not mean that all property buyers are," said Steve Brown, NAR president and co-owner of Irongate Realtors. "Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability and an incredibly opportunity for investment in the future."
Chinese nationals have particularly taken advantage of the market.
Nearly 1 in 4 dollars of foreign purchases come from Chinese buyers, according to NAR, and buying has risen more than 70% to $22 billion this year (CNNMoney.com July 8). Further, nearly three-quarters of Chinese purchases were all-cash transactions.
But it's not only the Chinese that are gobbling up American real estate. About 28% of realtors reported working with international clients this year, with home buyers hailing from Canada, Mexico, India and the U.K.
Combined with China, those countries only made up 54% of international transactions, according to NAR.
About 39% of international buyers, meanwhile, said they intended to use the purchased property as their primary place of residence.