Wednesday, August 13, 2008
Foreign buyers taking it or leaving it?
Okay, so there are conflicting reports about foreigners snatching up American real estate:
A report released August 7th by the National Association of Realtors revealed the curious fact that for 2008, for the 12 months ending in May, only 26% of 4,000 American real estate agents surveyed had at least one foreign client. In 2007, when a similar number of agents were surveyed, the proportion was much higher--32%. In both years, about half of the clients eventually bought a home, typically as a vacation home or investment. Those that didn't, the agents said, were turned off by the cost of the property (54%), immigration laws that prevent foreign nationals from living in the United States year-round (27.4%) and property taxes (24.2%).
There's not much sellers can do about taxes or immigration laws, but the reticence about prices is something every seller who wants to tap the foreign market needs to face. It's not clear from the way the question was worded whether foreigners are more concerned that properties are being priced above current market value or might lose value in the future. Regardless, sellers may need to put more thought into proving their neighborhood's stability to attract them.
Despite the Weak Dollar, Foreign Buyers Aren't Rushing In
Foreign money, which up to now has focused its attention on investing in iconic commercial real estate - like Barneys New York and the Chrysler Building - is now moving to scoop up tens of thousands of discounted foreclosed homes across the country.
One sovereign fund, said to have earmarked $29 billion to purchase foreclosed residential real estate, recently hired a West Coast mortgage broker and is starting to search for bargains, The Post has learned.
The search, which is being carried out, in part, by Field Check Group mortgage consultant Mark Hanson, who was retained by the broker, Steve Iversen, is concentrating on single- and multi-family REO (real estate owned) homes, or homes that have already been taken over by the mortgagee.
A sovereign fund would have two distinct advantages over other investors - the depressed value of the US dollar makes the homes a bargain, and sovereign funds have deeper pockets.