2014 Profile of International Home Buying Activity Summary of Report at http://www.realtor.org/reports/profile-of-international-home-buying-activity Lawrence Yun, Senior Vice President & Chief Economist Jed Smith, Managing Director, Quantitative Research Gay Cororaton, Research Economist Dollar Volume Sales to International Buyers Approximately 7 Percent of Total Market Dollars Increases in 2014 Due to Rising Prices and Volumes Estimated Sales Dollar Volume of U.S. Residential Property to Foreign Buyers ( in Billion Dollars) $92.2 $ 82.5 $ 66.4 2011 $68.2 2012 Estimate is for 12 month period April 2013 - March 2014. 2013 2014 Sales to Foreigners: Modest Growth Approximately 5 percent of Total Residential Transactions 6000000 5000000 4000000 3000000 2000000 1000000 0 2010 2011 2012 Domestic International 2013 2014 International Buyers: 7% of $1.2 Trillion Market Five Countries: 54 Percent of Total International Sales Estimate of International Sales from Major Buyers ( In Billion Dollars) Canada China Mexico India United Kingdom Total International Sales 2013 Sales ($) % Share $11.8 17% $12.8 19% $3.6 5% $3.9 6% $4.2 6% $68.2 2014 Sales ($) % Share $13.8 15% $22.0 24% $4.5 5% $5.8 6% $5.8 6% $92.2 Canada Leads in Number of Transactions China Leads in Dollar Volume Canada: $13.8 Billion; China: $22 Billion Distribution of International Transactions by Country of Origin 30% 25% 20% 15% 10% 5% 0% Brazil Canada China* France Germany India Japan Mexico Russia United Kingdom 2010 1% 23% 9% 3% 4% 5% 1% 10% 3% 9% 2011 3% 23% 9% 4% 4% 7% 2% 7% 1% 7% 2012 3% 24% 12% 3% 3% 6% 1% 8% 2% 6% 2013 2% 23% 12% 2% 3% 5% 1% 8% 2% 5% 2014 2% 19% 16% 2% 3% 5% 2% 9% 1% 5% Transactions Concentrated in Four States Percent of Total Foreign Transactions by State Foreign Purchasers: Geographic Preferences Canadians: Las Vegas, Detroit, Los Angeles, Ft. Lauderdale, Miami, Orlando Canadian Home Buyer Preferences Percent Distribution of Total Canadian Purchases Chinese: Los Angeles, San Francisco, Irvine, New York, Las Vegas Chinese Home Buyer Preferences Percent Distribution of Total Chinese Purchases 40% 36% 35% 23% 21% 9% 10% Florida Arizona California 3% 3% Texas Washington Other States 7% 6% 6% Foreign Purchasers: Geographic Preferences Indians: Los Angeles, Las Vegas, Chicago, Dallas, New York U.K.: Los Angeles, Orlando, Houston, Las Vegas, Kissimmee Indian Home Buyer Preferences Percent Distribution of Total Indian Purchases U.K. Home Buyer Preferences Percent Distribution of Total U.K. Purchases 53% 45% 21% 17% 8% 8% 8% 12% 6% 9% Florida California Texas 6% 6% Maine Maryland Other States Florida Popular with Latin Americans, Canadians, and Europeans Distribution of International Clients Purchasing in Florida 34% 28% 26% 8% 3% 2% Middle East Unknown 1% Africa Asia/Oceania Europe Latin America (inc Mexico) North America (exc Mexico) California: Popular with Asians and Canadians Region of Origin of International Clients Purchasing in California 62% 16% 13% 4% 1% 0% Africa Asia/Oceania Europe Latin America (inc Mexico) North America (exc Mexico) Middle East 3% Unknown Arizona: Particularly Popular with Canadians Region of Origin of International Clients Purchasing in Arizona 74% 11% 8% 3% 0% Africa Asia/Oceania Europe Latin America (inc Mexico) North America (exc Mexico) 3% 3% Middle East Unknown Texas: Popular with Latin Americans, Particularly Mexicans Region of Origin of International Clients Purchasing in Texas 59% 18% 9% 5% 4% Africa Asia/Oceania Europe Latin America (inc Mexico) North America (exc Mexico) 3% 3% Middle East Unknown Foreign Sales Tend to be at Higher End of Market Purchase Price (Percentage Distribution) Average Mean and Median Prices from April 2013-March 2014 U.S. Existing Home Sales International Sales Mean Price Median Price $247,417 $201,700 $396,180 $268,284 Percentage of Respondents With Clients 100% 90% 7% 7% 5% 12% 10% 13% 10% 15% 80% 70% 30% 28% 28% 60% 7% 15% 9% 16% 23% 29% 30% 50% 40% 30% 51% 56% 54% 54% 46% 45% 20% 10% 0% 2009 2010 2011 2012 2013 up to $250,000 $250,001 to $500,000 $500,001 to $ 1M $ 1M up 2014 Prices Paid by Buyers Vary by Country of Origin Purchase Prices of Top 5 International Homebuying Countries Based on Reported Transactions from Apr 2013-Mar 2014 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- Canada China India Mexico United Kingdom Median Price $212,500 $523,148 $342,857 $141,071 $350,000 Mean Price $314,718 $590,826 $459,028 $224,123 $499,242 Cash Sales Are in the Majority Type of Financing (Percentage Distribution) Percentage of Respondents With Clients 100% 90% 36% 80% 52% 70% 60% 37% 35% 38% 44% 54% 69% 50% 40% 30% 20% 43% 55% 62% 62% 63% 60% 2010 2011 2012 2013 2014 46% 28% 10% 0% 2007 2008 2009 All cash (no mortgage financing) With mortgage financing Don't know Foreigners Buy for a Variety of Reasons Most Important Factor Influencing Purchase Percentage of Respondents With Clients (Percentage Distribution ) 100% 8% 8% 7% 40% 39% 37% 29% 27% 31% 31% 20% 18% 21% 21% 22% 25% 2009 2010 2011 2012 2013 2014 8% 8% 9% 40% 45% 43% 90% 80% 70% 60% 50% 40% 32% 30% 31% 20% 10% 0% U.S. real estate is viewed as a secure investment. U.S. real estate is viewed as profitable investment. U.S. is viewed as a desirable location. Other Not All Potential Foreign Clients Purchase a House Foreigners Don’t Buy for a Variety of Reasons Reasons for Not Buying (Percentage Distribution ) Percentage of Responses 100% 90% 28% 21% 20% 80% 50% 21% 9% 25% 8% 26% 30% 20% 10% 0% 16% 21% 19% 7% 9% 29% 30% 1% 1% 2% 22% 6% 8% 33% 40% 30% 17% 18% 70% 60% 16% 2% 28% 1% 1% 10% 18% 21% 26% 24% 25% 2009 2010 2011 2012 2013 2014 Could not find a property to purchase Loss of home country benefits Cost/taxes/ insurance Immigration laws Financing issues Other Percentage of Respondents With Clients International Sales Tend to be Concentrated in Real Estate Practices Number of International Clients, Whether or Not Client Purchased a Property (Percentage Distribution) 100% 95% 3% 4% 6% 6% 90% 85% 91% 91% 2009 2010 1 to 5 4% 5% 4% 4% 9% 8% 9% 8% 87% 88% 87% 88% 2012 11 or more 2013 2014 80% 2011 6 to 10 Percentage of Respondents With Clients Transactions Tend to be Concentrated in Specialists 28 Percent of REALTORS® Have More than 10 Percent of Their Business with International Clients Percent of Transactions with International Clients for REALTORS® with International Clients (Percentage Distribution) 100% 17% 27% 22% 27% 54% 51% 52% 58% 54% 24% 22% 21% 16% 18% 2010 2011 2012 2013 2014 80% 60% 49% 40% 20% 34% 0% 2009 0% 1 to 10% 26% more than 10% 28% REALTORS® Have Both Resident and Non-Resident Clients Types of International Clients (Percentage Distribution) 100% 80% 60% 21% 23% 38% 33% 25% 37% 26% 30% 36% 34% 40% 20% 41% 44% 38% 38% 35% 0% 2010 2011 2012 2013 TypeA (Foreign Client) TypeB (Recent Immigrant) 2014 Both Types Steady Net Growth in Number of Clients Change in International Clients: Past 5 Years Percentage of Respondents With Clients (Percentage Distribution ) 100% 19% 90% 80% 9% 15% 10% 19% 17% 19% 9% 9% 7% 26% 6% 70% 60% 50% 57% 56% 53% 53% 40% 55% 48% 30% 20% 10% 15% 19% 19% 18% 21% 20% 2013 2014 0% 2009 Increased 2010 Stayed about the same 2011 Decreased 2012 Not applicable, have been in business less than 5 years 2014 Profile of International Home Buying Activity Major Conclusions • International Sales a Niche Market. – 7 Percent of total U.S. Home Sales by Dollar Volume. – Slow Growth/Varies from Year to Year. – Specialized Experience in Serving Buy-Side Important: Knowledge of language, customs, culture necessary in serving clients. • A Concentrated Market. – States: 55 percent of Transactions Concentrated in Florida, California, Texas, and Arizona. – Countries: 54 percent of Transactions by Nationals from Canada China, India, Mexico, U.K. • International Buyers are Diverse. – Motivations include investment, personal use (permanent or vacation), asset diversification. • International Buyers Need Assistance. – U.S. real estate Practices Differ from Foreign Practices – Cultural as Well as Day-to-Day Differences Between U.S. and Other Countries. • Sources of Clients – Generally Through Referral. – Websites Also a Source.