International Investors Boost US Real Estate Market By $82 Billion and Florida Comes Out On Top

International investors have spent a massive $82 billion on US real estate in the past year (year ending March 2011). This figure, released by the National Association of Realtors (NAR) in its 2011 Profile of International Home Buying Activity, shows a $16 billion increase from the $66 billion reported in 2010.

International investor sales include foreign clients with permanent residences outside the USA and those who reside within the USA for six months of the year. The top states for investor activity are Florida (31%), California (12%), Texas (9%) and Arizona (6%), accounting for 58% of all transactions.

The report also shows an increase in average spend, with investors paying an impressive $315,000 per property – almost £$100,000 above the national US buying average of $218,000.

The most popular type of property was the single family home (SFH) at 61%, followed by condos at 26%, townhouses at 10% and commercial property at just 3%. 62% of sales were all cash, 36% with foreign national mortgage financing and 2% unspecified.

Secure investment and long term appreciation

Lawrence Yun, senior vice president of NAR, tells us: “There are a variety of reasons for motivating the purchase of US property. Homes in this country are less expensive than comparable foreign properties, are viewed as a secure investment and provide rental and long term appreciation possibilities.”

Certainly, it looks as though the USA property market is now in recovery. The forecasted second wave of foreclosures has not arrived and, if anything, foreclosure filings appear to be dropping and Florida is leading the market. The Tampa Bay area alone saw filings drop 21% in May 2011 alone – the sixth decrease in seven months.

Nationally, the Mortgage Bankers Association reported delinquent loans to have fallen for five straight quarters and are at the lowest level since early 2009. RealtyTrac also reports a 33% drop in May 2011, citing defaults at their lowest level since 2006 (the peak of the US real estate market).

Foreclosure flurry at an end?

Despite some real estate professionals believing there’s still a shadow inventory of stock to hit the market, the figures continue to show a steady decline.

Leading Florida-based economist Dr. Sean Snaith Ph.D (Institute of Economic Competitiveness at UCF) doubts whether the shadow inventory is as large as predicted. Snaith explains that early foreclosure cases involved borrowers who shouldn’t have qualified for mortgages in the first place and the newer cases are borrowers who defaulted after losing jobs.

Snaith tells us: “The pace had to diminish. It could not go on forever. This may be a good sign.”

International billions boost trillion dollar market

Whilst $82 billion from international investors may be a drop in the ocean compared to the $1.07 trillion total of all US existing home sales (in the year ending March 2011), it is a much-needed boost to the market’s recovery.

The NAR report also cites other recovery factors in attracting international real estate investment, both in education and employment, as well as for pure investment purposes.

Lawrence Yun explains: “Many US colleges and universities have significant numbers of international students. Some families purchase the property for college residence and investment purposes, with the student(s) functioning in a landlord capacity with other students.”

He continues: “Another source is foreign executives temporarily working in this country. Typically, foreign executives on temporary assignments in the US seek rental properties. When the local high tech companies are in hiring mode, they bring many international buyers into our area.”

Orlando at centre of growth

Orlando, in particular, fits this bill. In addition to its $62 billion per year tourism trade, Orlando metro has a rapidly-growing $13.4 billion technology industry and hosts facilities for over 150 international companies. Medical City, the burgeoning biomedical development at Lake Nona, Orlando, is also expected to have an impact of $8 billion by 2020.

Mark Vitner, senior economist specialising in regional economies for Wells Fargo Securities LLC, comments: “People think I am gushing about Orlando, but I’ve got to believe the city will be one of the fastest growing cities over the next 25 years.”

Vitner says Orlando appeals to international businesses and investors because of its “screaming bargain real estate prices” and economical, direct flights to almost anywhere in the world.

Invest for just £30k to ride recovery wave

Axis is well-established in Florida, with dedicated investment strategies designed to maximise on the area’s market and growth. All our USA investment property is below current market value and, as our Florida partners are able to purchase foreclosures direct from the banks, the discounts for our clients can be up to 73%. Foreign national financing of 70% is also available on select investments.

We offer high-demand residential condos in the Kissimee-Orlando area (the Disney district) and single family homes (SFHs) around Medical City. Currently, investor capital requirements start from just circa £30,000 GBP (for a cash-sale condo, or a SFH with the finance option). However, as the foreclosure flurry slows and values start to trend upwards again, we don’t know how much longer this window of opportunity to buy at the lowest possible prices will be open.

Check out our latest Florida investment opportunities today and give us a call on our USA hotline on 0333 444 1440 (calls charged at standard rate from both landlines and mobiles and may be free with inclusive minutes, subject to service provider and contract specifications).

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