A healing housing market is sparking interest from investors around the globe. Investors see opportunity in several real estate markets including four right here in the U.S.. The top five cities that are attracting interest are London, New York, San Francisco, Houston, and Los Angeles.
Many investors are coming from China. Chinese buyers purchased $8.2 billion worth of properties in the U.S. in 2012. At the top of the list of cities to purchase real estate for Chinese buyers are New York and Los Angeles, according to juwai.com a website that Chinese buyers use to browse global real estate listings. Philadelphia and Detroit ranked third and fourth followed by Houston, Chicago, Las Vegas, Atlanta, San Diego, and Memphis.
The flurry of Chinese investor attention is generally welcome because the transactions are often cash deals.
According to the National Association of REALTORS, about 70 percent of Chinese buyers pay cash. Chinese buyers are interested in areas like New York, Los Angeles, Chicago, and San Diego because of their large Chinese communities.
Another big draw is cities that are located near where the Chinese want their children to attend college. The median home price for Chinese buyers in 2012 was $425,000 which was more than double the overall median U.S. home price of $199,500.
Overall, foreign investors from other areas such as Canada are seeking not only residential housing but also industrial properties, offices, retail, and multi-family homes.
Foreigners' great interest in luxury condos in the New York area is causing a shortage. The city has the lowest level of inventory in a long time–approximately 4,000 apartments are listed for sale.
Distressed commercial properties are also attracting foreign investors. Often these types of properties are avoided because of the extra money needed for renovations and any additional complications in complying with U.S. laws. However, the steep discounts are often enough to encourage Chinese investors to make the purchase. Chinese investors are using companies like auction.com, which sells a lot of distressed properties, to find good deals.
With the improving U.S. housing market, it seems that foreign buyers will remain hot for U.S. markets. They represent approximately seven percent of the entire U.S. market. Data released in the summer of 2013 from the National Association of Realtors, reported that foreign buyers had purchased $68.2 billion of single-family homes in the United States by March 2013. That's slightly down from the same period in 2012 but increased from 2011.
As 2014 gets underway, with new strict U.S. mortgage requirements that may shut some local buyers out of the market, it may just be foreign buyers who benefit.