International Transactions Down in Florida Housing Market
If you remember from our previous post on cash sales in the Florida housing market, it has been quite strong since the housing recession began turning around. Indeed, some might argue that international investors have helped reinforce this recovery period. That being said, it seems like the number of homes sold to foreign buyers actually dropped over the course of the year.
In a new report released by the National Association of Realtors (NAR), the numbers show that the amount of homes sold to international buyers was down compared to 2012, but the value of the average transaction was higher. In the 12 months ending with July 2013, 22,572 pre-existing homes were sold to foreign purchasers, while there had been 26,806 sales in the previous 12 months. At the same time, the accumulated value of these purchases came to $6.43 billion, as opposed to the total of $6.20 billion from the last year (this partly is a reflection of rising home prices in Florida).
Feeling the Effects of a Worldwide Recession
Economic recessions in Europe, Brazil, and other countries could help to explain the reduced number of transactions, since these places supplied many investors looking to purchase property in Florida. This is certainly one of the factors that Jed Smith, the managing director of quantitative research for NAR, believes contributed to this result.
“International activity is down partially because there has been a worldwide recession,” Smith reported in an interview.
Still, transactions from international buyers accounted for 9 percent of the $74 billion in existing home sales reported in the state of Florida. In 2012, the total transactions in Florida totalled $58 billion.
International Buyers Still Play Vital Role
The Florida Realtors Association and the National Association of Realtors had reported last year that foreign purchasers had produced $10.7 billion in sales, which would have accounted for 19 percent of the total $58 billion in sales for the year. They chose to revise these reported numbers in order to match the contemporary methodology, which is focused on non-resident foreigners.
Looking at the markets in South Florida, international buyers still play a very influential role, especially since the transactions reported here accounted for 21 percent of all Florida international sales. The second largest grouping of foreign purchases was focused around the Orlando-Kissimmee area, accounting for 14 percent of international transactions.
Who has an Eye for Florida Real Estate?
According to National Association of Realtor’s report, non-resident purchasers paid a median price of $216,477 for a piece of property in Florida. This is significantly higher than the state’s overall median sales price of $144,074 and the nationwide median sales price of $187,483.
Looking closer at the international buyers interested in a growing Florida real estate market, Canadians represented the largest number of purchasers, accounting for 29.6 percent of reported transactions. We also saw an influx of Chinese buyers interested in property here, moving from just 0.8 percent of transactions in 2011 to 3.7 percent over this last year. Florida’s real estate market currently attracts more international buyers than any other state in the country. So even though transactions may have dipped in the last year, this state still holds many opportunities for investors.