Americans' love affair with real estate may be cooling, but thanks to falling home prices and the weak dollar, attention is heating up from another group of suitors: foreign investors.
According to a recent NY Times article, foreign buyers who have always looked at high-end properties in cosmopolitan Manhattan or South Beach Miami as investment opportunities are showing interest in a much larger range of properties — from $60,000 single-family homes in South Florida's inland neighborhoods to $1 million waterfront villas located just miles from the Canadian border in Washington State. Almost one in five, or 18%, Realtors surveyed by the National Association of Realtors last year said they sold homes to international clients between April 2006 and April 2007. More recent data isn't yet available, but it appears that those numbers continue to rise.
For many foreign buyers, property in the U.S. is downright cheap. Canadians now get an 80% discount on what they would have paid for a piece of the U.S. just three years ago, when one Canadian dollar was worth just 80 U.S. cents and properties in some areas were 50% more expensive. (One Canadian dollar is now worth roughly $1 in U.S. currency.) For European buyers, whose currency carries 25% more buying power in the U.S. than it did just three years ago, today's depressed property prices are equally attractive.
While Americans are discouraged by images of neighborhoods blighted by "For Sale" signs and taped-off properties, foreign buyers are much more optimistic, especially about the long-term health of the U.S. market. They view this as the bargain of a lifetime and are terribly excited about it.
Nevertheless, unsold inventory in some areas is so abundant that it cannot be absorbed, even with increased interest from our neighbors north of the border or overseas, but foreigners can at least bring to the U.S. market what it's been lacking most in the past months...a psychological vote of confidence.
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