The saying goes that all real estate is local, but that does not mean that all homebuyers are local. According to the National Association of Realtors® 2015 international homebuyers report, global buyers spent an estimated $104 billion on housing in 2014, an increase of more than $10 billion from the previous year.
“We live in an international marketplace, and U.S real estate is extremely attractive to foreign buyers,” said 2015 President of the Eastern Bergen County Board of REALTORS Bowen Pak “International buyers recognize the Bergen County’s attractive prices compared to New York City, economic stability and well-defined property rights as an amazing opportunity for investment in their future.”
As more international buyers become a part of the fabric of American communities, they bring with them their many traditions and customs – including those that go along with moving into a new home. President Pak said, “223,000 Bergen County residents are Foreign Born, that is 33% of the total population. 51% of all homeowners are multi-national foreigners.” He explained this is why it is important to understand cultural relativity.
The EBCBOR Global Business Council has compiled a list of a few common housewarming traditions from around the globe, which you may want to use to welcome friends, family or neighbors into their new home.
Russia. According to Russian custom, a cat should cross over the threshold of the new home before anyone else enters. This is said to ensure that the homeowners will have a happy and prosperous life.
China. Before moving into a new home, Chinese custom is to shine a light in every corner, closet and wardrobe of the house. This is said to let any lingering spirits know that it is time to leave and how to find the way outside.
India. In India, it is considered lucky to move into a new house on Thursday, while Friday and Saturday are the unluckiest days to move. There is also the ceremonial housewarming known as ‘Grinha Pravesh,’ during which, in some parts of the country, a cow is allowed to walk through the house first, bringing good fortune to the homeowners.
France. When construction of a new home is finished, the French throw a traditional party called the ‘pendre la cremaillere,’ literally meaning ‘to hang the chimney hook.’ The phrase comes from medieval times when it was customary to invite over everyone who took part in the building of the house and eat dinner as a gesture of thanks. The food would be cooked in a large pot over a fire, where the chimney hook could be used to raise or lower the pot to heat or cool the food.
Buying a home in a foreign country can by a complicated and trying process, and Realtors® have the expertise to serve clients in a variety of international real estate transactions. So whether you are from Korea, Russia, India or Columbia, when you are ready to buy a home make sure to contact a Realtor®.
International buyers are consisting drawn to purchasing real estate in the U.S. for a variety of reasons, many cite the soundness of the government and financial systems which would better guarantee their home investment. These buyers also chose to purchase in the U.S. for its desirable location and climate, to be closer to family and friends, changes in work and employment, educational opportunities and affordable prices. Fourteen percent of international buyers purchased a property in the U.S. primarily for investment purposes. The quality of the Bergen County school system is an attractive feature for Russians living abroad.
The EBCBOR Global Business Council, recently named a Gold Council by the National Association of REALTORS®, hosts quarterly luncheons focusing on various topics in international real estate in addition to promoting important new and updates through its website and social media pages.
Wealthy, very nervous foreigners yanking their money out of their countries while they still can and pouring it into US residential real estate, paying cash, and driving up home prices – that’s the meme. But it’s more than a meme as political and economic risks in key countries surge.
And home prices are being driven up. The median price of all types of homes in July, as the National Association of REALTORS (NAR) sees it, jumped 5.6 percent from a year ago to $234,000, now 1.7 percent above the totally crazy June 2006 peak of the prior bubble that blew up in such splendid manner. But you can’t even buy a toolshed for that in trophy cities like San Francisco, where the median house price has reached $1.3 million.
And the role of foreign buyers?
[N]ever have so many Chinese quietly moved so much money out of the country at such a fast pace. Nowhere is that Sino capital flight more prevalent than into the US residential real estate market, where billions are rapidly pouring into the American Dream. From New York to Los Angeles, China’s nouveau riche are going on a housing shopping spree.
So begins RealtyTrac’s current Housing News Report.
“For economic and political reasons, Chinese investors want to protect their wealth by diversifying their assets by buying US real estate,” William Yu, an economist at UCLA Anderson Forecast, told RealtyTrac. “The best place for China’s smart money to invest is the United States.”
In the 12-month period ending March 2015, buyers from China have for the first time ever surpassed Canadians as the top foreign buyers, plowing $28.6 billion into US homes, at an average price of $831,800, according to the NAR. In dollar terms, Chinese buyers accounted for 27.5 percent of the $104 billion that foreign buyers spent on US homes. It spawned a whole industry of specialized Chinese-American brokers.
Political and economic instability in China along with the anti-corruption drive have been growing concerns for wealthy Chinese, Yu says. “China’s real estate market has peaked already. Their housing bubble has popped.”
So they’re hedging their bets to protect their wealth. And more than their wealth…
“China’s economic elites have one foot out the door, and they are ready to flee en masse if the system really begins to crumble,” explained David Shambaugh Professor at George Washington University in Washington, D.C.
China has capital controls in place to prevent this sort of thing for the average guy. But Yu says there are ways for well-connected Chinese to transfer money to the US, particularly those with business relationships in Hong Kong or Taiwan.
But in the overall and immense US housing market, foreign buying isn’t exactly huge. According to the NAR, foreign buyers acquired 209,000 homes over the 12-month period, or 4 percent of existing home sales. But foreign buyers go for the expensive stuff, and in dollar terms, their purchases amounted to 8 percent of existing home sales.
In most states, offshore money accounts for only 3 percent or less of total homes sales. But in four states it’s significant: Florida (21 percent), California (16 percent), Texas (8 percent), and Arizona (5 percent). And in some trophy cities in these states, the percentages are huge.
Among California cities that are hot with Chinese investors: Alhambra, Arcadia, Irvine, Monterey Park, San Francisco, San Marino, and in recent years Orange County, “a once heavily white middle-class suburb that is now 40 percent Asian and becoming increasingly expensive,” according to RealtyTrac:
Buyers from China, including investors from Hong Kong and Taiwan, are driving up prices and fueling new construction in Southern California areas such as Arcadia, a city of 57,000 people with top-notch schools, a large Chinese immigrant community, and a constellation of Chinese businesses.
For example, at a new Irvine, California development Stonegate, where homes are priced at over $1 million, upwards of 80 percent of the buyers in the new Arcadia development are overseas Chinese, according to Bloomberg…
Similar dynamics are playing out in New York.
“In Manhattan, we estimate that 15 percent of all transactions are to foreign buyers,” Jonathan Miller, president of a New York real estate appraisal firm, told RealtyTrac. “Luxury real estate is the new global currency,” he says. “Foreigners are putting their cash into a hard asset.” And they see US real estate as “global safe haven.”
This article was originally published on WOLF STREET.
Between now and 2020, roughly four out of every 10 new households that form in the U.S. will be headed by someone of Hispanic descent—more than any other single racial or ethnic group. The Hispanic demographic will be a key driver of home rental and purchasing activity in the next several years, and this will have important implications for the housing sector. Hispanics aspire to homeownership, and the majority of Hispanic movers want to purchase when they move. But a new report from The Demand Institute finds that there is significant business opportunity in meeting the housing and community demand of Hispanic households in the next five years.
Hispanics & Home Ownership: Closing the Gap is the latest publication from The Demand Institute, a non-advocacy, non-profit think tank jointly operated by The Conference Board and Nielsen. The report finds that nearly four million Hispanics would like to purchase a home when they move, but only 1.5 million are financially prepared to do so—a gap of 2.5 million households that will struggle to attain the goal of homeownership because they lack the down payment, income or credit to follow through on their plans.
“Hispanics were hit especially hard by the financial crisis and housing crash, and the outlook for homeownership is uncertain,” says Louise Keely, president of The Demand Institute. “The homeownership rate among Hispanic households now stands at 44 percent and continues to decline. Still, Hispanics are a large and fast growing segment of the housing market, and their distinct demand for communities and housing could stimulate innovation for a wide range of businesses, including financial services.”
In 2007, the Hispanic homeownership rate peaked at nearly 50 percent but has been in decline ever since. “Hispanics are one of the fastest-growing demographics, and their prospects for homeownership and what they will seek from communities in a lot of ways reflect the outlook for the entire country,” continued Keely.
The report also finds that more Hispanics are moving to the suburbs, even though Hispanics are still more likely than non-Hispanics to live in urban areas. “Hispanic households are still most likely to be family households,” says Jeremy Burbank, who is a vice president at The Demand Institute and leads the American Communities Demand Shifts Program. “Hispanics are moving to the suburbs for more space, better schools and more affordable housing – they’re looking for places to raise their families,” says Burbank.
Hispanics & Home Ownership: Closing the Gap is the first report from The Demand Institute’s American Communities Demand Shifts Program, which provides insight on the future of American communities, including the ever-evolving housing sector. The program is an extension of more than four years of in-depth research conducted by The Demand Institute, and will help business leaders and policymakers better anticipate and address the needs of consumers and citizens.
For more information, visit DemandInstitute.org/Projects/American-Communities/.